Rising mortgage rates are prompting some lenders to downsize to adapt to changing market conditions. But the market shift is also expected to drive mergers and acquisitions.

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New Jersey-based AnnieMac Home Mortgage has expanded its presence in the mid-Atlantic region by acquiring OVM Financial Inc., a purchase-focused mortgage originator with over 220 employees and offices across Virginia and in North Carolina, Texas and Florida.

The terms of the deal were not announced.

AnnieMac is a “doing business as” or trade name of Mount Laurel-based American Neighborhood Mortgage Acceptance Company LLC which also operates as Lofi Direct. According to the Nationwide Multistate Licensing System, the company is licensed in 48 states — everywhere but Iowa and North Dakota — and sponsors 517 mortgage loan originators who work out of 96 branch locations.

Ryan Kube

“In a rising rate environment, growth, scale and culture are more important than ever,” AnnieMac President Ryan Kube said in a statement. “OVM brings that to AnnieMac in spades.”

Headquartered in Virginia Beach OVM Financial — formerly Old Virginia Mortgage Inc.— was founded in 2001 and is licensed in 14 states.

OVM’s four owners — Matt Beckwith, Aaron Legum, George Temple Jr. and Ben Temple — will take on active leadership roles at AnnieMac, the companies said, as will OVM Financial CEO Adam Newman and Vice President of Sales Brian Hill.

Matt Beckwith

“We’re excited to partner with AnnieMac to continue providing exceptional service to our customers and referral partners,” Beckwith said in a statement. “AnnieMac provides growth opportunities to our employees, and we share the excitement for what our two organizations can do together.”

Mortgage refinancings expected to drop by 69% this year

Source: Fannie Mae June 2022 Housing Forecast.

Rising mortgage rates have put the brakes on the profitable refinancing boom of 2020-21 when the Federal Reserve’s efforts to keep interest rates low during the pandemic helped lenders refinance more than $5.4 trillion in mortgages.

With mortgage rates nearly doubling in the last year only 2 percent of outstanding mortgages have an incentive to refinance, Fannie Mae economists said in a June forecast that predicted refinancing volume will drop by 69 percent this year to $797 billion and by another 35 percent in 2023 to $518 billion.

Thanks in part to rising home prices, purchase loan volume is projected to decline by a more modest 3 percent this year to $1.808 trillion and by another 6.7 percent in 2023 to $1.686 trillion. That means lenders can expect to do most of their business making loans to homebuyers rather than refinancing existing homeowners.

Many mortgage lenders have downsized to adapt to changing market conditions, and First Guaranty Mortgage Corp. — a Texas-based national mortgage lender that specializes in riskier “non-QM” loans — filed for Chapter 11 bankruptcy protection on June 30.

But the market shift is also expected to drive mergers and acquisitions, such as Redfin’s $135 million deal to acquire San Francisco-based Bay Equity Home Loans in January and real estate technology platform HomeLight’s agreement to acquire cash offer provider Accept.inc, announced in June.

There has also been a move to consolidate among companies that provide services to mortgage lenders, most notably Intercontinental Exchange Inc.’s plan to acquire mortgage software, data and analytics provider Black Knight for $13.1 billion.

While that deal is expected to face scrutiny by antitrust regulators, borrower conversion platform Mortgage Coach and automated retention software Sales Boomerang announced last month that the companies had merged under the leadership of a new CEO, SparkPost veteran Richard Harris

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Email Matt Carter

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