Mortgage Lender in Quiet $1 Billion Acquisition

 Aris Mortgage Holding Co., the parent of AmeriHome Mortgage Co., is being acquired by Western Alliance Bancorp.The Phoenix-based owner of Western Alliance Bank will pay $1 billion in cash for the Thousand Oaks lender. The deal is expected to close in the second quarter and will make AmeriHome a subsidiary of the bank.

Steve Curley, division president at Western Alliance Bank, said that no changes will come to the Conejo Valley offices of AmeriHome.The mortgage company has about 1,000 employees and in addition to Thousand Oaks, also has offices in Dallas.

“Those will continue to be the two main hubs for the company,” Curley said.Jim Furash, founder and chief executive of Aris Mortgage, said that AmeriHome has been a customer of Western Alliance for about five years. The decision to sell to the Arizona bank came out of the relationship between himself and Western Alliance Chief Executive Ken Vecchione and the fact that both companies have a similar culture, said Furash, who also serves as chief executive of AmeriHome.

“It is rare that you have a business opportunity that makes strategic sense and also have a shared culture to the nature that we have,” Furash added. “It was really a result of a lot of long years and a lot of hard work, but we are excited about it.”Furash started AmeriHome in November 2013. He had previously served as president of Countrywide Bank, a division of the former Calabasas-based financial giant Countrywide Financial Corp.Two revenue streamsAmeriHome’s business model is based on two revenue streams – buying mortgages from other, smaller lenders then selling them to Fannie Mae or Freddie Mac, and by making mortgages directly to consumers.

The latter has historically been focused on what is known as the recapture business or soliciting existing customers. In the future, the plan is to grow by broadening the outreach and targeting customers outside the lender’s portfolio.It will also broaden the products it offers beyond the conventional and government lending that it has done in the past. That would include jumbo loans and non-qualified mortgage loans, Furash said.

“Those will give us a significant competitive advantage over other players in the market that we compete against,” he added.

Competitors for AmeriHome include large banks like JPMorgan Chase & Co. and Wells Fargo & Co.

There are also other independent mortgage lenders such as PennyMac Financial Services Inc. in Westlake Village, which Furash described as “another big competitor of ours.”As for selling packaged mortgages, Western Alliance’s Curley said that AmeriHome brings value to the smaller lenders they buy the loans from.

The smaller lenders cannot do business with Fannie Mae or Freddie Mac and so they get the benefits of that by selling their loans to AmeriHome, who in turn sells them to the government lending institutions, he said.“Then AmeriHome makes a little bit of money by providing that service,” Curley added.Furash said his company provides liquidity to the smaller lenders as well as approving their operational and financial performance.

“We review the loans and check the underwriting and making sure they are compliant as well and the risk is appropriate,” Furash said.

“They are an enabler of small- to medium-sized businesses, which is exactly what the bank focuses on,” Curley added.Technology aheadBoth Furash and Curley said that the big changes in the mortgage industry revolve around technology.

“The story of the last decade has been the growth of the independent mortgage banks that are not part of large banks and going forward it is going to be about the changing technology and how it interacts with consumers,” Curley said.How baby boomers interacted with mortgage companies is a lot different from how the millennials interact with them, he continued.

“That is the key part of figuring out the mortgage industry,” Curley said. “It is figuring out the next layer of tech-enabled consumer and how do you interact with them.”On the consumer side, there is technology that empowers the user to make more informed decisions and not have to rely so much on a dedicated mortgage company sales force, Furash explained.On the capital market side, the focus of technology is on automating information and creating an easier process for mortgage sellers to sell loans and improve their pricing to consumers, he said.

“I am somewhat optimistic about keeping the cost of home ownership as affordable as possible due to the technology innovations that are coming around,” Furash added.