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Fintech mortgage lender Lower has an agreement to acquire Texas-based Thrive Mortgage LLC in a cash and stock deal it says would double its footprint — and give Thrive investor Veritex Holdings Inc. a 12.5 percent ownership stake in Lower.
Dallas-based Veritex is the parent company of Veritex Community Bank, which paid $54.9 million to acquire a 49 percent interest in Thrive Mortgage in 2021.
Although details of Thrive’s proposed merger with Lower were not disclosed in an announcement Thursday, Veritex said in a Dec. 12 regulatory filing that it expects to recognize a loss of $25 million to $30 million if the deal closes as expected during the first quarter of 2024.
Georgetown, Texas-based Thrive is a family-owned business licensed in 42 states that sponsors 208 mortgage loan originators working out of 52 branch locations, according to records maintained by the Nationwide Mortgage Licensing System (NMLS). The company claims it was the first lender in Texas to close a fully electronic note with a remote notary, and offers a full suite of mortgage options including construction, reverse mortgages and “non-QM” loans.
Lower plans to preserve the Thrive brand name, with Thrive CEO Selene Kellam and production head Randell Gillespie joining Lower’s executive team.
Columbus, Ohio-based Lower is licensed in 45 states and sponsors 446 mortgage loan officers working out of 74 branch offices, according to NMLS records. Lower also provides real estate brokerage services and homeowners insurance through Lower Realty LLC and Lower Insurance Services LLC.
Dan Snyder
Lower CEO Dan Snyder said in a statement that Lower is “building a better approach to mortgage” and that Thrive “is an award-winning, national lender with the same belief and we’re excited to bring them onto our platform.”
Snyder co-founded a Maryland-based mortgage lender and servicer, Homeside Financial, in 2014. While Homeside Financial and its associated brands remain under the Lower Holding Co. umbrella, the company accelerated its growth with the 2018 launch of Lower.com, which provided a more streamlined, digital process.
A $100 million Series A funding round in 2021, led by venture capital firm Accel, and a licensing deal with the Columbus Crew Major League Soccer team (who defeated Los Angeles FC at Lower.com Field on Dec. 9 to win the MLS Cup), helped the company continue to invest in technology and raise its visibility.
Last month, Lower hired Amir Syed as its new chief growth officer and announced that Universal Lending, a privately held, Denver-based lender, would become a division of Lower, with industry veteran TJ Kennedy overseeing retail and wholesale loan production.
Lower claims it’s now the nation’s 30th biggest home lender, operating an online consumer-direct channel, offline retail channel, and third-party origination platform servicing mortgage brokers and fintechs like Opendoor.
In January, Lower announced that it had signed Opendoor as the first customer of a new “mortgage as a service” platform that allows consumer finance, banking and real-estate brands to offer digital-first mortgage products.
Lower’s platform offers white-label options and can be embedded into the partner’s process through application programming interface (API) and no-code solutions, the company said at the time.
Roy Jones
“The commitment of Thrive to our team and our customers has always been to deliver the best mortgage experience with the highest quality resources,” Thrive Mortgage Chairman Roy Jones said in a statement. “This has driven us to focus on having the best people with the most forward-thinking technology in the industry, all of which is propelled forward with this partnership with Lower.”
In its most recent annual report to investors, Veritex said that while its investment in Thrive generated $5.8 million in net income in 2021, it lost nearly as much on Thrive last year — $5.1 million.
The shift from black to red “was primarily due to the negative impact of rising interest rates on the fair value and volume of loans originated by Thrive,” Veritex disclosed to investors.
But Veritex noted that Thrive’s 2021 results were also boosted by the forgiveness of a $3.95 million Paycheck Protection Program (PPP) loan granted by the Better Business Bureau (BBB) during the pandemic. As 49 percent owner of Thrive, Veritex said the BBB’s decision to forgive 100 percent of the PPP loan boosted its 2021 earnings by $1.9 million.
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