Ellie, Calyx Settle

As part of the settlement, Dublin, Ca.-based Ellie Mae has agreed to pay Calyx an undisclosed sum of money.

In a telephone interview, Ellie CEO Sig Anderman declined to tell MortgageDaily.com how much the company will be paying Calyx.

Ellie has denied that it copied Calyx’s product, but Anderman did say Ellie agreed to settle the lawsuit so that it could focus on its business.

In a joint statement, both companies echoed that sentiment, describing the financial settlement as “mutually beneficial in allowing both companies to focus on serving their respective customers.” Industry observers agree.

Calyx said in a written statement that it filed the lawsuit to “stop further sales and distribution of Encompass.” A Calyx spokeswoman declined to provide further details, citing the confidential nature of the agreement.

Mortgage loan officers use Calyx’s Point and Ellie Mae’s Encompass programs to process loan packages from consumers. According to information from Calyx’s Web site, 68 percent of all mortgage brokers use Calyx Point.

Ellie Mae launched Encompass in December 2003. The company reported that, by the following spring, 10 percent of the mortgage market was using its product.

“Now we can all start moving on with our business. It probably took a financial toll on both companies and now they can move on with helping the industry,” said Eric Weinstein, chief executive officer for Carteret Mortgage Corporation — reportedly the second largest mortgage broker in the country.

Weinstein, who added that he testified in the litigation as to the similarities and differences in the two programs, said Carteret uses Encompass, Ellie Mae’s product.

Craig Focardi, research director with TowerGroup, a Needham, Mass.-based technology, research and advisory firm, said, “The resolution of the lawsuit is a big positive for the mortgage lending industry because Ellie Mae and Calyx are the two leaders in mortgage broker software and this enables them to focus their management time and dollars on improving their products and services.”

He added that the lawsuit created “some uncertainty” for mortgage brokers who are customers of the companies and for the lenders seeking to enhance their wholesale lending systems. He said the settlement eliminates that uncertainty.