Zillow enters the mortgage business by purchasing a lender
Zillow Group is moving from being a mortgage marketer to originating loans with its acquisition of Mortgage Lenders of America, in an effort to support its home flipping business.
The price for the Overland Park, Kan.-based lender was not disclosed. The deal is expected to close in the fourth quarter.
Zillow is in the lead generation business through Zillow Mortgage Marketplace. In June, the Consumer Financial Protection Bureau dropped an inquiry over possible violations of the anti-kickback provision of the Real Estate Settlement Procedures Act in its co-marketing program.
Its current advertising products for lenders — Connect, Custom Quotes and lender co-marketing — remain an important part of the business, and the company intends to support and grow that marketplace for years to come, Zillow said in a press release.
Mortgage Lenders of America is an existing marketplace client. It also solicits leads on LendingTree, according to the company’s website.
Last year it originated 4,400 loans and that leaves a lot of other business for lenders that want to advertise on its platform, Zillow said. Dollar volume figures for the lender were not disclosed.
“Getting a mortgage can be the toughest, most painstaking and time-consuming part of the home-buying process,” Greg Schwartz, president of media and marketplaces at Zillow Group, said in the press release.
“Now that we are buying and selling homes through Zillow Offers, we believe that having our own mortgage origination service as an option for consumers will allow us to streamline the process for people who buy a Zillow-owned home. Over time, we expect the work we do in conjunction with this new line of business will help us expand our offerings to our partners — including real estate brokers with existing in-house mortgage operations and third-party lenders who co-market with Premier Agents.”
LendingTree tried to get into the mortgage business with the acquisition of Home Loan Center, but exited during the real estate bust in 2012 when it sold the company to Discover.
Discover found a similar lack of success and exited the business in 2015.
Mortgage Lenders of America has 300 employees. Its president, Philip Kneibert will remain with the company as general manager, and will report to Schwartz.
Zillow’s been an active acquirer of companies in the real estate space, including Trulia and document services company DotLoop in 2015. This year, it got into the home flipping business. Other brands include StreetEasy and RealEstate.com.
“At this exciting time in the real estate industry, Zillow Group is committed to developing innovative technology and services, like Zillow Offers and, with today’s announcement, potential for mortgage originations, that help our partners meet evolving consumer expectations, while generating more revenue opportunities,” CEO Spencer Rascoff said in the company’s second-quarter earnings press release.
Revenue in Zillow’s mortgage segment slipped 8% during the quarter to $19.3 million from $20.9 million one year ago.
The company reported a net loss of $3.1 million for the quarter, an improvement from the $21.8 million loss for the second quarter of 2017.
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