Network Financial Services of San Jose, Calif., which bills itself as a one-stop shopping service for homebuyers, is moving aggressively to beef up its loan origination capability.
The company has agreed to buy Westmark Mortgage Corp. of Costa Mesa for about $6.4 million and to acquire the business assets of Mortgage Lenders Financial Network of San Jose, a private company, for an undisclosed price.
The deals should increase the company's annual loan volume by about 400%, to about $720 million, according to an announcement.
The ambitious moves come at a time when the California economy is struggling, but also when new federal rules have facilitated vertical integration in real estate and mortgage services.
Placing Software at Brokers
Network Financial now has plans to go national by offering new software for management of real estate offices. A mortgage origination capability is included, and the company hopes to significantly expand its lending volume by placing the software with large numbers of brokers. It is also looking to expand its insurance sales.
The company says users can operate the program by touching the screen or pushing buttons on the screen with a mouse. Network is hoping for wide acceptance of the software because of its simplicity in an industry where the use of computers is still limited and the focus remains on sales rather than operations, said Lee Danna, chairman and chief executive officer of the company.
The company will use the software in all its California offices and will offer it to brokers nationally as well. The program was developed with Sector Group, based in Burlingame, Calif.
Stable Earnings Stream'
Mr. Danna said the acquisitions provide Network with more than $450 million of mortgage servicing, "which can provide a stable earnings stream to offset interest rate-related fluctuations in origination volume."
Network provides real estate, mortgage, insurance, and other related services in Northern California.
The company operates three divisions: Network Real Estate, a large real estate brokerage business; Network Capital Group, a 25-year-old mortgage banking operation; and Network Home Services, a provider of insurance brokerage and property care services.
Mr. Danna projects combined overhead savings of $1.2 million dollars after the acquisitions. He added that the expansion should double the company's total annual revenue to about $27 million.