It looks like Radian Group’s much-heralded acquisition of Clayton Holdings back in 2014 is turning out to be quite the hit-or-miss deal.
Radian paid $305 million to acquire Clayton, which provides loan due diligence, surveillance, REO management, consulting, valuation, title and settlement services to the mortgage industry, along with its subsidiaries Green River Capital, Red Bell Real Estate and ValuAmerica.
Once in the fold at Radian, the Clayton business began operating as part of Radian’s “services” segment, but that line of business eventually began to drag on Radian’s business.
Back in 2017, Radian initiated a plan to restructure its business, shifting its focus to its “core” mortgage insurance and real estate segments and away from its “underperforming” services business.
And now, Radian has sold off a piece of Clayton’s business.
The company announced Wednesday that it sold Clayton Services, which provides loan due diligence and credit risk management surveillance services, to Covius Holdings, the technology solutions provider formerly known as LenderLive.
“The sale is consistent with Radian’s strategic focus on its core mortgage and real estate businesses and reflects the repositioning of its Services segment initiated in 2017,” the company said in a release.
According to the companies, the deal does not include Green River Capital, which provides REO asset management and single-family rental services; Red Bell Real Estate, a data-focused real estate brokerage services; or ValuAmerica, which is now known as Radian Settlement Services.
Also not included in the deal are Radian’s more recent acquisitions, including Entitle Direct Group, a title insurance and settlement services company that specializes in selling title insurance directly to consumers; Five Bridges Advisors, a provider of mortgage, consumer, and real estate analytics; and Independent Settlement Services, a national appraisal and title management services company.
“The driving force behind all that we do at Radian is our focus on our core mortgage and real estate capabilities and our commitment to serving the strategic needs of our clients,” Radian CEO Rick Thornberry said.
“We continually evaluate and refine the strategic solutions that we offer across the mortgage and real estate value chain, and part of that evaluation means making adjustments when necessary,” Thornberry added. “We will continue to focus on building our core mortgage and real estate products and services through a data-driven, digital transformation that has come to define our One Radian strategy.”
As part of the deal, approximately 550 Clayton employees, primarily in the company’s Tampa and Denver locations, will be joining Covius, along with Clayton’s senior due diligence and surveillance management teams.
For Covius, the deal allows the company to expand its offerings. Just like Radian, Covius, a 2019 HW Tech100 winner, has been expanding in the last few years.
Last year, Covius acquired a sizable chunk of Chronos Solutions, buying Chronos’ credit, flood, income and tax verification services; government services; REO management and disposition; online foreclosure auction; and homeowners association tracking units.
And in 2018, the company acquired reQuire Holdings, a group of technology-enabled companies that provide compliance, quality assurance and valuation solutions for both the residential and commercial real estate markets.
The company later sold off its mortgage fulfillment and secondary marketing division, LenderLive Network, to Computershare Loan Services.
And now, Covius is acquiring Clayton Services.
“Clayton is one of the most recognized brands in capital markets and mortgage securitization. This transaction will significantly expand the offerings and presence of Covius in those sectors,” Covius Chairman and CEO Rob Clements said. “Clayton will be a core business for Covius. We intend to invest the capital and resources to grow Clayton’s market share and build the technology required by the increasingly digital processes of the origination and secondary markets.”
Financial terms of the deal were not disclosed.
“This acquisition aligns well with what we have been building at Covius over the past two years. Our current due diligence capabilities, our expanded solutions set and our deep experience in review valuations, title curative services and compliance will all support and enhance Clayton engagements,” Covius President and COO John Surface said. “This significantly increases our scale, scope and operational capacity to serve new and existing clients. We are pleased to welcome Clayton clients and associates.”
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