Redfin is reshaping its mortgage business in 2022.
The Seattle-based company announced on Jan. 11, that it has agreed to acquire Bay Equity Home Loans, a national, full-service mortgage lender, in a cash and stock transaction worth $135 million.
According to a press release and public filing, the deal, which is expected to close in the second quarter of 2022, will help increase Redfin’s financing capabilities nationally.
“For years, Redfin has talked about becoming a one-stop-shop for brokerage, mortgage, iBuying and title services,” said Redfin CEO in a statement. “Just having one company offer all these services is more efficient, letting us keep customers’ lending fees low.”
Redfin also indicated that it is laying off 121 employees in its mortgage business in preparation for the acquisition.
The workforce reduction is projected to account for approximately $7 million in costs and transaction advisory fees of about $3.5 million.
For employees who are out of a job, Redfin stated that there would be re-employment opportunities within other arms of the company or 12 weeks and 26 weeks of severance, depending on tenure.
There are no plans to reduce Bay Equity staff, according to Redfin.
Redfin said that Bay Equity’s footprint makes it more efficient at producing and selling loans to investors. The company hopes to increase profits while maintaining lower rates by absorbing the Corte Madera-based lender.
“With Bay Equity’s geographic presence and full product suite, we’ll be able to offer mortgages to a larger share of Redfin’s home-buying customers right away, including jumbo loans and loans for veterans and folks with lower credit scores,” said Adam Wiener, Redfin’s president of real estate operations.
Bay Equity is a licensed mortgage lender in 42 states and employs approximately 1,200 people, making it nearly ten times the size of Redfin’s mortgage business.
According to Redfin, the merger will help its lending arm match its brokerage, which employs roughly 2,400 agents.
“This is a formidable combination,” said Bay Equity CEO Brett McGovern, adding that the merger will position the lending company to thrive in a changing mortgage market.
“In addition to our established book of business, we will benefit from the customers generated by Redfin’s more than $25 billion in real estate transactions each year,” McGovern added.
After the deal closes, the Bay Equity management team will continue to operate under the Bay Equity name. Some Redfin Mortgage employees will move to Bay Equity, including Redfin’s loan officers.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
