Acquisitions-hungry New Residential Investment Corp. (NewRez) has agreed to acquire multichannel lender Caliber Home Loans in a deal valued at $1.675 billion, the firms announced on Wednesday.
The agreement with NewRez, a publicly traded mortgage REIT, comes roughly six months after Lone Star Funds attempted to take Caliber public. Since the independent public offering fell apart, sources have told HousingWire that private equity owner Lone Star has been shopping for a buyer for Caliber.
News of late-stage talks between NewRez and Caliber were first reported by HousingWire in the LendingLife newsletter.
In a statement on Wednesday, NewRez said the transaction is expected to close in the third quarter of 2021.
With the acquisition, NewRez is acquiring a heavy-hitter across multiple origination channels. Caliber originated $80 billion in mortgages in 2020. It also has a $153 billion servicing portfolio with roughly 630,000 customers as of Dec. 31, 2020. Caliber made $891 million in pre-tax income in 2020, with a return on equity of 53%.
The firm, led by former Citi Mortgage CEO Sanjiv Das, is best known for its distributed retail footprint. It also does a fair amount of business in correspondent and wholesale channels.
“We believe this is a terrific acquisition for our Company,” said Michael Nierenberg, head of New Residential. “Over the years, Caliber’s experienced team has built a differentiated purchase-focused originator with an impressive retail franchise and solid track record in customer retention. The combination of NewRez and Caliber’s platforms will create a premier financial services company with scale, talent, technologies and products to accelerate our mortgage company objectives and generate strong earnings for our shareholders. With this acquisition, we have significantly strengthened our capabilities to perform across interest rate environments.”
NewRez said the deal would allow the firm to grow and strengthen its earnings profile across different rate environments. It will also add Caliber’s customer-retention capabilities (it had a 54% recapture rate last year), a network of talented underwriters and back-office staff, plus a large servicing book.
The Caliber deal represents yet another big acquisition for Nierenberg’s real estate investment trust. In 2019, NewRez acquired Ditech‘s forward origination and servicing business for $1.2 billion. The company also acquired Shellpoint Partners (the parent of New Penn Financial) in 2018 for $190 million.
According to 2020 HMDA data, Caliber originated 228,633 single-family loans in 2020 with an origination volume of $70.6 billion. It ranked fifth in purchase loans.
For months, New Residential Investment Corp. has been considering an IPO for its New Rez mortgage division. The company is recovering from a difficult 2020, in which it posted a loss due to the devastating hit of $1.6 billion on MSRs in the first quarter of 2020. Its mortgage business, NewRez LLC, originated 29,000 single-family loans worth $7.35 billion in 2020, according to HMDA data. It ranked 67th in loans issued and 76th in volume.
If the deal goes through, it would be the third large-scale mortgage company acquisition in recent months. Guaranteed Rate acquired Stearns Lending in a private deal in early January and AmeriHome (which also failed to go public) was scooped up by Western Alliance for approximately $1 billion.