Real Estate

Essent Scooping Up Finance Of America’s Title Businesses For $100M

The struggling lender’s pivot to reverse mortgages creates an opportunity for the big private mortgage insurer to acquire Agents National Title and Boston National Title.

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Finance of America’s pivot to reverse mortgage lending has opened up an opportunity for private mortgage insurer Essent Group to get into the title insurance business by acquiring two companies from Finance of America subsidiary Incenter for $100 million, the companies said on Thursday.

Pending approval from regulators, Essent will acquire Agents National Title, a Missouri-based title insurance underwriter with 44 state licenses, and Boston National Title, a North Carolina-based independent title agency that provides title and settlement services with licenses in 40 states and Washington, D.C.

“Title insurance is a natural complement to our mortgage insurance business with relatively low and stable loss ratios historically,” said Essent CEO Mark Casale in a statement. “The acquisitions of Agents National Title and Boston National Title add a team of seasoned title professionals to Essent and provide a platform to leverage our capital position, lender network and operational expertise across an adjacent real estate sector as we continue to expand our franchise.”

Private mortgage insurers protect lenders against losses, with Fannie Mae and Freddie Mac requiring private mortgage insurance whenever homebuyers make down payments of less than 20 percent. According to the industry group U.S. Mortgage Insurers, private insurers backed $600 billion in loans in 2021, with 65 percent of that volume for new purchases and 35 percent for refinanced loans.

Bermuda-based Essent Group is one of the nation’s six primary providers of private mortgage insurance, offering private mortgage insurance through its subsidiary, Essent Guaranty Inc. Headquartered in Radnor, Pennsylvania, Essent Guaranty employed 350 workers as of Sept. 30, at locations including underwriting and service centers in Winston-Salem, North Carolina and Irvine, California.

According to the company’s most recent quarterly report to investors, Essent generated $17.1 billion in new insurance written during the third quarter of 2022 and had $222.5 billion of insurance in force.

Finance of America, which disclosed terms of the deal including the sale price of the two companies in a regulatory filing Thursday, said the sale of Agents National Title and Boston National Title is part of its plan to exit forward mortgage lending and focus on reverse lending.

After posting a $302 million third-quarter net loss, Finance of America announced in October that it was getting out of the forward mortgage lending business altogether. In December, the Plano, Texas-based lender announced a deal to acquire reverse mortgage lender American Advisors Group (AAG).

Finance of America’s acquisition of AAG is expected to close in the first half of 2023, subject to regulatory approvals, the company said at the time. Upon completion of the deal a new subsidiary, Finance of America Reverse LLC, will operate a separate direct-to-consumer retail channel under the brand name AAG, whose ads feature celebrity spokesperson Tom Selleck, the company said.

Graham Fleming

“[Finance of America’s] strategic direction and long-term growth initiatives are centered on providing an innovative suite of solutions to help Americans achieve their retirement goals through the use of their home equity,” CEO Graham Fleming said in a statement on the sale of the company’s title insurance businesses. “This transformation has included the decision to discontinue the operations of our forward mortgage originations segment and expand on this vision through our announcement to acquire the assets of AAG.”

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