Deal gives the nation’s biggest provider of riskier “non-QM” mortgages additional capacity to offer more traditional loans backed by Fannie and Freddie, FHA, VA and USDA.
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Rocket Companies’ plans to acquire loan servicer Mr. Cooper won’t include the company’s wholesale and non-delegated correspondent mortgage business, which now belongs to Ft. Lauderdale, Florida-based A&D Mortgage LLC.
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A&D Mortgage — which claims to be the nation’s biggest provider of riskier “non-QM” mortgages — said the deal to acquire Mr. Cooper’s third-party origination platform “significantly expands” the company’s presence in more traditional agency (Fannie Mae and Freddie Mac) and government (FHA, VA and USDA) lending.
“The combination of the two businesses represents a powerhouse in the wholesale mortgage space, with more than $10 billion in originations funded in 2024 and an expanded broker network of over 8,500 partners,” A&D Mortgage said Tuesday in announcing the closing of the deal.
Terms of the deal, first announced in January, were not disclosed. Mr. Cooper had acquired the business in November from struggling Flagstar Bank, as part of a $1.3 billion deal that also included $356 billion in mortgage servicing rights.
Members of Flagstar Bank’s third-party originations team who made the move from Flagstar to Mr. Cooper last fall are now being welcomed aboard A&D Mortgage.
The wholesale and non-delegated correspondent team members from Mr. Cooper have officially joined A&D Mortgage and integration efforts “are well underway,” the company said.
The integration of Mr. Cooper’s third-party originations team provides A&D Mortgage’s partners access to a comprehensive suite of more than 20 mortgage programs, including agency, government, jumbo and non-QM, with enhanced operational efficiency and “industry-best turnaround times.”
“Bringing our teams together has opened new horizons,” A&D Mortgage COO Lana Izgarsheva said in a statement. “Our shared values, commitment to innovation and customer-first mindset make this a natural fit. We’re excited about the opportunities ahead — for our partners, clients and employees.”
Wholesale lenders fund loans originated by independent, third-party mortgage brokers — a model that helped United Wholesale Mortgage (UWM) surpass Rocket Mortgage as the nation’s largest provider of home loans in 2022. (While Rocket also provides mortgages through a wholesale and non-delegated correspondent lending channel, Rocket Pro, it does most of its business directly with consumers).
In addition to working with mortgage brokers to fund loans through its wholesale channel, A&D Mortgage works with correspondent lenders who use their own funds to originate loans and then sell them to investors like A&D.
“Delegated” correspondents are permitted to perform their own underwriting, while “non-delegated” correspondents only take applications and documentation, with the investor performing the underwriting.
A&D Mortgage works with both delegated and non-delegated correspondents, and “mini-correspondent” lenders with smaller net worths.
Automated underwriting for non-QM loans
A&D Mortgage has made a name for itself in “non-Qualified Mortgage” (non-QM) lending, providing loans that are popular with entrepreneurs and gig workers with alternative forms of income and assets.
“Qualified Mortgages” — including all FHA, VA and USDA loans — must meet standards adopted in 2014 to discourage lenders from offering risky loans and to encourage them to carefully evaluate each borrower’s ability to repay. Lenders who meet the QM standards are granted a legal safe harbor from lawsuits by borrowers, which makes it easier to bundle loans into mortgage-backed securities that are sold to investors.
Conventional loans backed by Fannie Mae and Freddie Mac and jumbo loans can also be classified as QM if they don’t have risky features like interest-only periods or negative amortization or charge high interest rates or fees.
For a loan to be considered QM, the lender must also verify monthly income, assets and debt — which can be challenging for self-employed borrowers.
In March, A&D Mortgage announced the launch of what it claims is the first automated underwriting system (AUS) for non-QM loans, providing instant approval of loan eligibility and automated generation of custom loan conditions.
Max Slyusarchuk
The system is “a major step forward in simplifying the complexities of non-QM lending,” A&D Mortgage CEO Max Slyusarchuk said in a statement, providing mortgage brokers with “a faster, more reliable way to process loans while maintaining the flexibility that non-QM loans require.”
Slyusarchuk said A&D Mortgage has “a multi-year roadmap for the development of this service,” which is already saving “a lot of time and effort for our partners.”
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