April 26, 2019
Ellie Mae Changes Ownership
Ellie Mae—which despite having a name remarkably similar to Fannie Mae and Freddie Mac, is not a government-sponsored entity, but is rather the financial tech company headquartered in California that has become the standard in mortgage financial tech—has recently changed hands. Private equity investment firm Thoma Bravo LLC made an all-cash offer of $3.7 billion in the buyout. The take-home for shareholders came out to $99 per share. This purchase—which is projected to take place in the second or third quarter of 2019—will change the status of the firm from being publicly traded to being a privately-held company.
Ellie Mae’s software is a general-purpose go-to for those in the real estate industry. Lenders use it to do things like originate a mortgage, underwrite a mortgage, and even close on home loans completely online. Rising standards in mortgage processing increasingly require the sort of rigor of verification and paperless speed that only a software provider like Ellie Mae can handle. In particular, its software called Encompass allows mortgage originators to provide the services mentioned above and to handle marketing. The holistic nature of the software makes it possible for them to avoid having to cobble together various softwares and processes into an idiosyncratic workflow. And the Ellie Mae Network, meanwhile, behaves as a place of connection for lenders, service providers, and investors, facilitating the process.
Ellie Mae’s Encompass services are purchased, by mortgage originators, either via a monthly subscription model or based on volume. Investors and lenders pay for the Ellie Mae Network’s services on a fee-per-transaction basis.
More than 2,000 lenders utilize Ellie Mae’s softwares and services, and the Network users’ numbers approach 250,000; its retention of business nears 95 percent, which puts it on fairly secure footing as institutions go, though of course its valuation is likely to rise and fall with the cycles of the real estate market.
When the company went public in 2011, it was valued at $6 per share.
If you’re shopping around for a home in Florida, Rhode Island or Massachusetts, and plan to get a mortgage from either a large institution or a smaller institution, it’s likely that Ellie Mae will be involved in the mortgage process. But a homebuyer must look out for their own ownership interests. Contact us to see how we can help ensure proper transfer of title and provide title insurance. Topouzis & Associates, P.C., is backed by multiple underwriters, staffed by residential real estate specialists and ready to help you avoid costly delays and streamline your residential transactions.