Spring EQ, Philadelphia based provider Home equity products and financingannounced that it had agreed to be acquired by an alternative investment group
The lender will merge with Cerberus Residential Opportunities, a global platform that invests in residential mortgage securities and assets, in a move that will enhance the lender’s technology capabilities and provide more lending options to consumer borrowers, according to Spring EQ leadership. The buyer is an affiliate of New York-based Cerberus Capital Management, which oversees approximately $60 billion in assets across complementary credit, private equity and real estate.
“This partnership with Cerberus comes at a perfect time in our journey,” Spring EQ founder and CEO Jerry Schiano said in a press release. “The mortgage expertise, technology capabilities and operational resources of the Cerberus team will help drive our growth, positioning us to make an even greater impact.”
Schiano, the first of those Started business in 2016, will continue to lead Spring when the deal closes alongside the lender’s current management team. Financial terms were not disclosed. Law firms Dechart and Dentons both acted as legal advisors to Cerberus, while Morgan Stanley provided financial guidance. Katten Muchin Rosenman and GreensLedge Capital Markets served as legal and financial advisors to Spring EQ.
The deal comes as the mortgage industry continues to struggle with declining business volumes As a result of interest rate shocks, leading to greater interest in home equity loan products. Rapidly rising mortgage rates Reduced refinancing volume by 86% on an annualized basis The first quarter of this year was a record low of 121,000, according to recent research by TransUnion. But HELOANs have gained interest among homeowners looking for an option to tap into their property’s value, with the volume of new products emerging almost double that of refinances. The number of home equity lines of credit, although lower on a year-over-year basis, also exceeded both refinance and HELOAN volumes.
“There is an accelerating demand for home equity solutions, and Spring EQ is a leader in an already growing market,” said Joe Stefa, managing director of Cerberus Residential Opportunities, of the deal.
“Amidst high interest rates and record levels of residential home equity in the U.S., Spring EQ is providing American homeowners with an easier, more transparent option to unlock their value.
The deal between Spring and Cerberus is the latest in a wave Mergers and acquisitions within the mortgage sector from early 2022. It comes later Guild Mortgage announced its acquisition A lender this week, another in a series of purchases it has made over the past few months.
Investment groups are also eyeing the lender as a potential acquisition target. In August, New Jersey-based Dr American Financial Resources has agreed to sell its business To Colorado Fund Manager.