The king of mortgage leads is getting out of the loan origination business. The buyer has been in the home-loan business before.
Discover Financial Services will acquire Home Loan Center from Tree.com, a news release Friday said. The unit will fetch a $55.9 million net purchase price.
The deal is expected to close by the end of the year. Tree.com shareholder approval is required before the transaction can consummate.
The unit, which does business as LendingTree Loans, originates, processes and funds residential loans in all states.
LendingTree Loans, itself, said late last year that it would acquire SurePoint Lending. In its first-quarter earnings report, the Charlotte, N.C.-based company confirmed the closing of the acquisition.
SurePoint reported more than $10 billion in originations since inception.
LendingTree reported $2.8 billion in production for 2010. First-quarter volume at LendingTree was 2,300 loans for $0.497 billion, tumbling from $850.4 billion three months earlier and $608.6 billion a year earlier.
Tree.com Chairman and Chief Executive Officer Doug Lebda explained in the statement that proceeds from the sale will go towards other lead verticals, while the move will allow a better focus on the core lead generation business. He noted that demand for the company’s leads is currently strong.
But at least some of the net proceeds will be eaten up by $40 million first-quarter loss at Tree.com.
For its part, Discover sees growth opportunities.
“The sale will add a home loan component to Discover’s direct-to-consumer banking products, which include credit cards, personal loans, private student loans, certificates of deposit, savings accounts and Roth individual retirement accounts,” according to the announcement.
But it’s not Discover’s first venture into mortgage lending.
Dean Witter Discover Novus Financial operated in the mortgage arena during the nineties.
Former Novus executive Michael Sawyer went on to head Alt-A lender Saxon Mortgage Services Inc., and guide it through its December 2006 acquisition by Morgan Stanley. His own exit from the business preceded the worst of the housing crash.
Another former Novus executive, Peter Schwartz, heads wholesale lending at Nationstar Mortgage LLC.