Optimal Blue's merger with rival LoanSifter prepared both companies to meet the latest challenges circling the mortgage sector.
The deal brings together the two largest standalone developers of product and pricing engines remaining in the mortgage industry. Both companies develop software-as-a-service applications that share many attributes, explains Bruce Backer, LoanSifter's former president, who now assumes the title of managing director at Optimal Blue.
"I've been surprised at the degree to which we are similar and in fact, when we've talked about our challenges, they're very similar," he says. "We've struggled to do certain types of integrations, work with certain types of clients and other various issues in the market that are common."
Executives from the two companies said the transaction provides an opportunity to concentrate research and development resources and expand the quantity and type of mortgage lenders using the technology. The deal was finalized in December. Deal terms are undisclosed.
"We're able to consolidate resources more effectively on a single mission, rather than two companies doing the same thing in parallel, which will make us that much more broad-spectrum and effective," says Optimal Blue Co-CEO Larry Huff (pictured) in an exclusive interview.
Optimal Blue, which helps lenders compare pricing and eligibility requirements, is backed by San Francisco-based Serent Capital. Huff, fellow co-CEO Ivan Darius and "a few employees" also hold ownership stakes in the company. LoanSifter is primarily owned by Backer, chairman John Wiley and founder Craig Doriot, along with a small group of shareholders.
With LoanSifter's Appleton, Wisc.-based office, Optimal Blue will have three offices, including its headquarters in Plano, Texas, and the Denver-based operation it acquired in its 2008 purchase of Secondary Interactive. Huff says there are no plans to lay off any of the combined company's employees.
The LoanSifter brand will be eliminated and the company will unify under the Optimal Blue brand. "Since we are direct competitors and we have very similar products and services, we hope that will make it easier for the market to understand our single purpose rather than have confusion around different names and labels and brands," Huff says.
Eventually, Optimal Blue will have a single product eligibility and pricing engine, or PPE, platform, but those efforts are in the early planning stages.
"We are going to probably spend the next few months coming up with that plan," says Darius. "In the meantime, it's essentially business as usual."
Huff and Darius started Sollen Technologies in 1999. They left in 2002, found Optimal Blue and acquired Sollen in 2011.
PPE technology rose in prominence during the housing boom because of its ability to sort and manage the myriad loan products and investor types available to originators. Following the financial crisis, PPEs shifted their focus by adding more origination capabilities.