Freddie Mac announced Thursday that it had agreed to purchase significant parts of Tuttle Decision Systems, a Sausalito, Calif., mortgage-technology company, from Microsoft Corp.
Freddie officials said they had signed an agreement Wednesday night to acquire the unit responsible for a suite of online lending tools from Tuttle, which it will use to assist brokers and small lenders to originate loans over the Internet and sell them into the secondary market. Microsoft will keep Tuttles Risk Management Services Inc. unit, which helps lenders hedge their loan portfolios.
The terms of the deal were not disclosed, though it is expected to close soon.
A Freddie spokeswoman said that buying the risk management unit would have been inappropriate for Freddie Mac because it would give the company a glimpse of clients portfolios. The deal will also allow Freddie to offer mortgage lenders technology to provide on-line services.
Tuttle, at one time solely owned by Microsoft, was spun off with HomeAdvisor early last year to form a separate company with several high-profile partners, including Bank of America, Wells Fargo & Co., J.P. Morgan Chase & Co., General Motors Corp., and Freddie Mac. That effort, however, fell apart early this year, and Microsoft absorbed HomeAdvisor back into MSN, its network of Internet services.
The sale to Freddie will most likely not sit well with larger mortgage lenders, which under the auspices of FM Watch, a Washington lobbying group and critic of both Freddie Mac and Fannie Mae, have protested what they see as the continuing encroachment by both companies into their business.
Pete Maselli, senior vice president of business development at Freddie, said he anticipates criticism from FM Watch but added that Freddies role is to help consumers, not to protect the business of certain lenders. He called criticism of Freddie unfortunate and said it may have a sinister intent because the critics appear to be attempting to slow innovation to protect their market positions.