ICE on a signing spree for new ‘mortgage tech ecosystem’


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Mortgage tech provider Intercontinental Exchange Inc. continues to capitalize on last year’s $11.8 billion acquisition of Black Knight by signing new clients at a furious pace in pursuit of a bigger slice of what the company estimates is a $14 billion-a-year market.

Several deals announced this week illustrate how executives at Intercontinental Exchange (ICE) envision synergies from the Black Knight deal attracting more lenders to what the company can now tout as an “end-to-end mortgage technology ecosystem.”

To satisfy antitrust regulators, ICE agreed to sell Black Knight’s Empower loan origination system (LOS) and Optimal Blue marketplace platform to subsidiaries of Canadian-based software giant Constellation Software.

But ICE could afford to part with those assets since it already had competing offerings, including its popular Encompass LOS and Encompass Product and Pricing Service. One of the main attractions of the Black Knight deal was that it gave the company new capabilities to provide technology to mortgage servicers who collect payments from borrowers.

Now that it’s a provider of technology that helps lenders manage every step of the process — from taking applications, underwriting and closing loans to collecting payments from borrowers and selling loans on the secondary market — ICE can claim to touch 85 percent of all U.S. mortgages in some way.

With the Black Knight acquisition, ICE can not only offer an end-to-end technology platform to new customers but also cross-sell additional services to existing customers for whom it handles only some aspects of the mortgage process.

This week, for example, ICE announced it had signed Lennar Mortgage, a longtime Encompass user, as a customer of its MSP loan servicing system, which ICE acquired from Black Knight.

Lennar Mortgage, a subsidiary of the homebuilder of the same name, is an “interim servicer,” collecting mortgage payments from borrowers until the loans it originates are bundled up and sold to investors in the secondary market.

Lennar Mortgage sees a “clear benefit in leveraging the deep integrations between Encompass and MSP,” Lennar Mortgage President Laura Escobar said in a statement.

Laura Escobar

Laura Escobar

“Our loans are serviced in-house for a brief time, which means risk management, regulatory compliance, and customer-facing capabilities need to perform from minute one,” Escobar said. “It also means we need to be able to move loans quickly and seamlessly from origination into servicing, and then on to their final destination just as easily.”

This week ICE also announced that Fifth Third Bank will move its mortgage origination and servicing operations to the Encompass and MSP platforms.

Fifth Third Bank, which in 2016 signed an agreement to use a full suite of services provided by Black Knight, including Empower, said it will also incorporate “multiple ICE data and analytics solutions” to help mitigate risk, identify opportunities and gain insights that support data-driven decision making.

Jay Plum

Jay Plum

“ICE’s approach to modernizing housing finance with integrated technology and seamless data sharing aligned perfectly with what we’re seeking to accomplish for our customers,” Fifth Third Bank executive Jay Plum said in a statement. “We share a vision for a smooth, simple and accessible experience, from the start of a customer’s mortgage journey all the way through their long-term servicing experience.”

In addition to signing new customers and cross-selling new services to existing clients, ICE continues to invest in its technology.

This week, ICE announced the addition of a mortgage insurance center to Encompass, allowing lenders to help homebuyers putting less than 20 percent down shop for private mortgage insurance from all six major providers: Arch MI, Enact, Essent, MGIC, National MI and Radian.

Tim Bowler

Tim Bowler

“With all major MI providers available at launch, we’re opening doors for lenders to effectively engage with and order mortgage insurance, all through a single interface,” ICE Mortgage Technology President Tim Bowler said in a statement.

The deals announced this week are just a representative slice of the business that ICE has landed since closing the Black Knight deal on Sep. 5.

In the final three months of 2023, ICE signed 37 new Encompass clients and four new MSP clients, capping off the strongest year since 2018 for Encompass and MSP sales, the company said on a fourth-quarter earnings call.

ICE had previously identified the opportunity to achieve $125 million in revenue synergies within five years by cross-selling Encompass to servicing clients, MSP to Encompass clients, and ancillary products and data solutions to users of both platforms. In just five months, ICE signed $30 million in deals.

Ben Jackson

Ben Jackson

Given that rising interest rates dragged 2023 mortgage volumes to levels not seen since 1991 — “a generational low” — and that lenders are eager to modernize their processes, the company is confident that the Black Knight acquisition will pay off, ICE President Ben Jackson said on the Feb. 8 call.

“The demand we are seeing across our platform gives us confidence that we can grow a business that at $2.1 billion in revenue today is only a fraction of the $14 billion addressable market that’s in the early days of an analog to digital conversion,” Jackson said.

On the expense side, ICE expects to realize “approximately $135 million in annualized savings by the end of 2024, ahead of our original expectations of roughly $100 million by year-end,” ICE Chief Financial Officer Warren Gardiner said.

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