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Mortgage technology provider Intercontinental Exchange made $11.8 billion last year by signing up new customers at a breakneck pace as it pursues a larger slice of a market it estimates at $14 billion a year. The company continues to take advantage of its Black Knight acquisition.
Several deals announced this week are part of a black knight deal that Intercontinental Exchange (ICE) executives said will attract more lenders to the “end-to-end mortgage technology ecosystem” the company can now tout. It shows how synergies are envisioned.
To satisfy antitrust regulatory requirements, ICE has agreed to sell Black Knight’s Empower Loan Origination System (LOS) and Optimal Blue marketplace platform to a subsidiary of Canadian-based software giant Constellation Software.
However, ICE already had competing products such as the popular Encompass LOS and Encompass Product and Pricing Service, so it could afford to part with these assets. One of the main attractions of the deal with Black Knight was that it gave the company new capabilities to provide technology to mortgage servicers that collect payments from borrowers.
ICE is currently a provider of technology that helps lenders manage every step of the process, from accepting applications, underwriting and closing loans, to collecting payments from borrowers, and selling loans on the secondary market. Therefore, ICE can claim to service 85% of all mortgages in the United States. In some way.
The acquisition of Black Knight not only allows ICE to provide an end-to-end technology platform to new customers, but also allows it to cross-sell additional services to existing customers that handle only part of the mortgage process.
This week, for example, ICE announced that it had signed on as a customer with long-time Encompass user Lennar Mortgage. MSP loan repayment systemAcquired by ICE from Black Knight.
Lennar Mortgage, a subsidiary of the homebuilding company of the same name, is an “interim servicer” that collects mortgage payments from borrowers until the loans are assembled and sold to investors on the secondary market.
Laura Escobar, president of Lennar Mortgage, said Lennar Mortgage believes there are “clear advantages to leveraging the tight integration between Encompass and MSP.” statement.
Laura Escobar
“Our loans are serviced in-house for a short period of time, which means risk management, regulatory compliance and customer-facing capabilities need to be in place from the beginning,” Escobar said. “This also means they need to be able to move their loans quickly and seamlessly from origination to repayment and on to their final destination with equal ease.”
ICE also announced this week that Fifth Third Bank will transition its mortgage origination and repayment operations to the Encompass and MSP platforms.
Fifth Third Bank, which signed an agreement in 2016 to utilize Black Knight’s suite of services, including Empower, said it uses “multiple ICE data and analytics to reduce risk, identify opportunities, and gain supporting insights.” He said he would also incorporate “solutions.” Data-driven decision making.
Jay Plumb
“ICE’s approach to modernizing housing finance through integrated technology and seamless data sharing is perfectly aligned with what we are trying to accomplish for our customers,” said Jay Plumb, Fifth Third Bank executive. he said. statement. “We share a vision of creating a smooth, simple and accessible experience for our customers, from the beginning of their mortgage purchase process to their long-term service experience.”
ICE continues to invest in its technology, in addition to signing new customers and cross-selling new services to existing customers.
This week, ICE announced the addition of a Mortgage Insurance Center to Encompass. This allows lenders to help homebuyers obtain private mortgage insurance from all six major providers for less than 20 percent: Arch MI, Enact, Essent, MGIC, National MI, and Radian. Ta. .
tim bowler
“All major MI providers will be available at launch, allowing lenders to effectively access and order mortgage insurance through a single interface,” said Tim Bowler, president of ICE Mortgage Technology. said. statement.
The deals announced this week are just a representative sample of the business ICE has acquired since completing the Black Knight transaction on September 5th.
ICE signed 37 new Encompass customers and four new MSP customers in the last three months of 2023, capping off the strongest year for Encompass and MSP sales since 2018, the company said. This was stated at the fourth quarter financial results conference.
ICE previously said it would achieve $125 million in revenue synergies within five years by cross-selling Encompass to service clients, MSPs to Encompass clients, and ancillary products and data solutions to users of both platforms. We were identifying opportunities. In just five months, ICE signed him to a $30 million contract.
ben jackson
Given that rising interest rates caused mortgage transaction volumes in 2023 to fall to levels not seen since 1991 (a “generational low”) and that financial institutions are keen to modernize their processes, ICE President Ben Jackson said he is confident the Black Knight acquisition will pay off. by phone on February 8th.
“The demand we’re seeing across our platforms is growing our $2.1 billion business today, which is just a fraction of our $14 billion addressable market, which is in the early stages of converting from analog to digital. It gives me confidence that I can do it,” Jackson said. .
On the spending side, ICE will “exceed our initial expectations of approximately $100 million by the end of the year, resulting in annual savings of approximately $135 million by the end of 2024,” said Warren Gardiner, ICE’s chief financial officer. said.
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