Fintech Maxwell acquires mortgage solutions provider LenderSelect

Wells Fargo-supported mortgage fintech Maxwell has entered into an agreement to buy a provider of mortgage solutions LenderSelect Mortgage Group from Blue Ridge Bank. The financial terms of the transaction have not been disclosed.

The deal, announced Tuesday, expands Denver, Colorado-based Maxwell’s trading platform for the secondary market and brings hundreds of new clients to the company’s other solutions. It’s Maxwell’s first M&A deal since its inception in 2015, and the company has an appetite for more.

John Paasonen, Maxwell’s CEO and co-founder, said talks between the company and the sellers began last fall.

“We started talking about partnerships, and that turned over a few months into LenderSelect joining our platform,” Paasonen said in an interview. “They bring us the scope and relationship of their business.”

Richmond, Virginia-based LenderSelect Mortgage Group, which provides mortgage solutions to lenders, closed the sale to Blue Ridge Bankshares Inc. in January 2020, has grown to a portfolio of over 180 community banks and credit unions.

According to Paasonen, the expectation is that LenderSelect will enable Maxwell to expand its secondary market trading platform, known as Maxwell Capital. The platform was originally launched in September 2021 in an effort to reduce the volume of loans on small and medium-sized lenders’ balance sheets.

“As part of Maxwell, we will expand our customers’ access to world-class technology that gives our partners critical leverage in this constricted market, while providing even more solutions for them to compete,” said Tracy Marks, CEO of LenderSelect. statement.

Following the transaction, Marks will lead Maxwell Capital, and LenderSelect will add 24 employees to Maxwell’s total of 160 employees.

For its part, Maxwell expects the transaction to increase its market share significantly.

“We probably touch about 5% of the loans in the market, not only in the secondary platform, but across all our products. We have everything from the point of sale, quality control to due diligence, as we offer services across the entire origination value chain,” said Paasonen .

Maxwell says they have facilitated over $250 billion in loan volume to date, and with the addition of LenderSelect, they now partner with more than 400 lenders nationwide, enabling them to outperform the market by over 20%.

Acquisitions are on Maxwell’s radar, according to the CEO.

“We are looking at opportunities to grow not only organically, but also inorganically,” Paasonen said. “We’re not going to add more services. It’s about enriching what we already do and deeply in the different spaces.”

Maxwell has liquidity to support potential acquisitions, according to Paasonen. In October 2021, Maxwell raised $52.5 million in additional funding, just seven months after raising $16 million in a Series B round.

“We are well capitalized going through the cycle and have incredibly supportive investors aligned with the decisions we are making to grow,” Paasonen said.

When asked if Maxwell is profitable, the executive said that as a venture-backed business, Maxwell invests for growth. “We certainly have a path to profitability if we choose. But our goal is to continue to invest in products, engineering, sales and marketing to grow the business.”

Maxwell, which markets its product to small and medium-sized lenders, uses artificial intelligence technology to streamline and accelerate the mortgage lending process for community lenders and their borrowers.

The company believes that community banks and credit unions are important financial resources when large banks withdraw from towns and cities. However, they are competing with lenders with the scale and technology to counter the margin compression driven by high mortgage rates and low housing supply.