Two companies that had planned to become partners in HomeAdvisor Technologies Inc., a joint venture majority-owned by Microsoft Corp. that was announced with great fanfare in March, quietly pulled out of the deal early this summer after closely examining the Redmond, Wash.-based start-up.
Wells Fargo Home Mortgage in Des Moines and Bank of America in Charlotte, N.C., opted after completing due diligence several months ago not to invest in HomeAdvisor, officials at the banking companies said. The venture was founded to license lending technology to lenders, brokers, and real estate professionals.
Chase Manhattan Corp.'s mortgage unit and GMAC-Residential Funding Corp., a unit of General Motors Corp., are still involved both as equity partners and as users of the technology; they invested more than $100 million in HomeAdvisor's first round of funding, which closed in late August. Freddie Mac, the second-largest buyer of mortgages, is also still involved; its Loan Prospector pricing and underwriting tools are embedded in HomeAdvisor's lending technology.
A spokesman for Wells Fargo said that when the joint venture was announced March 16 Wells had only signed a nonbinding letter of intent.
"We completed our due diligence and determined that our involvement in the new company would not substantially accelerate or enable our strategic plans," he said. "So for those reasons and others, we decided not to participate."
He declined to elaborate but added that Wells Fargo is continuing efforts to develop or acquire Internet origination technology "to support our consumer strategies."
Michael D. Grad, senior vice president of consumer real estate at Bank of America, said that, when his company decided to pull out, HomeAdvisor did not offer the software package the North Carolina company sought, one that would take the borrower all the way from application to the funding of a loan.
HomeAdvisor was heading in that direction, he said, but "we had to make a decision to get this capability for our customers." Bank of America announced Tuesday that it had agreed to use software from Tarrytown, N.Y.-based Framework Inc.
Tim Newberry, a vice president at HomeAdvisor, said Bank of America was searching for a new loan origination system, which the joint venture could not provide. Bank of America would have had to install a new loan origination system before adopting HomeAdvisor's technology, he said.
Mr. Newberry said the banking company has been using HomeAdvisor's pricing technology in its wholesale and correspondent channels. "It's going very well," he said.
Mr. Newberry said Wells Fargo has had its hands full with systems integration issues because it and its parent have made several acquisitions recently.
"We couldn't come up with the silver bullet to solve all their problems, but we're still having discussions on a commercial basis to license other technology."
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