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The Massachusetts mortgage industry is set to gain a new face when Residential Mortgage Services merges with Guild Mortgage later this year.
The two companies announced the largely-cash $197 million deal earlier this week, which will see Guild buy RMS outright via share purchases, although senior RMS leaders will see some of their shares traded in for Guild ones based on a formula that includes the average closing price of RMS sales as the closing date nears.
Current RMS shareholders will also receive a three-year earnout based on net income from RMS branch locations.
The deal is expected to close in the third quarter of 2021, subject to regulatory approvals and other normal closing conditions.
“We have a history of growing through targeted acquisitions, and the transaction with RMS supports our strategy to expand into the Northeast,” Guild CEO Mary Ann McGarry said in a statement. “Our close cultural alignment and commitment to strong values across both organizations, combined with a retail and purchase market focus provide us with confidence that this acquisition will contribute to our ongoing success. With both teams dedicated to providing exceptional customer service, and the many synergies between our products, sales tools, and servicing teams, this is a natural fit. We expect the combination will result in an even stronger platform that will continue to deliver profitable sustained growth, as we create long-term value for all our stakeholders. We look forward to welcoming RMS to the Guild team.”
Based on RMS’ and Guild’s 2020 loan originations, the combined company would have been the seventh-largest non-bank retail lender in the country, Guild said.
According to The Warren Group, publisher of Banker & Tradesman, RMS originated 8,834 loans worth $3.02 billion in Massachusetts in 2020, or 1.69 percent of the combined purchase and refinance market. The company has a particularly strong presence in the New Hampshire market, commanding 7.32 percent of the statewide purchase market there in 2020.
Guild currently has no offices in the Northeast, making the acquisition complimentary to its current branch footprint, the company said. RMS has 70 offices across 14 states in the Northeast, including 19 in Eastern Massachusetts and Cape Cod.
“We are excited to join forces with Guild Mortgage to drive continued growth for our respective stakeholders,” RMS President and CEO Jim Seely said in a statement. “Guild and RMS share a similar entrepreneurial culture – one that places a high value on market expertise, efficiency and productivity. This transaction is a natural next step to build on our success and take our business to the next level by partnering with a national powerhouse in the residential mortgage market. Leveraging Guild’s technology, in-house servicing platform and enhanced access to the capital markets will enable us to further expand our value to our customers, provide new opportunities for our employees and continue growing our market share in the Northeast.”
