Mortgage audit firm LoanLogics has purchased LoanBeam, a company approved by major government-related investors to help process and calculate self-employment income used in underwriting.

Private equity firm Sun Capital Partners bought LoanLogics earlier this year as one of its first investments in a new technology vertical, and the subsequent purchase of LoanBeam is a result of that collaboration, according to a press release. None of the private companies involved in either transaction have disclosed the financial terms involved, but Bill Neville, CEO of LoanLogics, was willing to discuss some of the circumstances that led to the LoanBeam deal.

“Since our acquisition in July, we’ve been actively looking for companies that are out there that would be a fit. We looked at a few and didn’t find anything that fit our criteria [until] we became aware of LoanBeam,” he said in an interview. “We do similar work, not around income [like LoanBeam does], but we take loan files, target specific fields in there, and then we run rules against them, so there’s a synergy there that makes sense.”

Bill Neville of LoanLogics

LoanBeam stood out as an acquisition target in part because it has been a pioneer in its niche, automating the calculation of self-employment income data from tax documents. It is approved to do so by two of the largest government-related investors in the U.S. mortgage market.

“It’s not easy work. How do you capture the data from the tax returns, how do you put it in the right buckets, and then follow the standards the GSEs have? How you organize all this to understand what income is can be tricky,” said Les Parker, managing director at consultancy Transformational Mortgage Solutions, and a former senior vice president at LoanLogics. “Any time you move away from the W-2 employees it gets complicated. That’s why a lot of lenders want to serve only wage earners, if possible.”

Roughly 10% of all loans are made to self-employed borrowers, which could limit LoanBeam’s reach. However, it also is expanding its services to include automation that handles calculations for wage documentation. In joining LoanLogics, it will be part of an operation on the lookout for expansion opportunities, which could occur through further acquisitions, if the company finds more that match its needs, or organic growth, Neville said.

Joining a growing company like LoanLogics could help give LoanBeam the push it needs to be more competitive as other companies, such as CoreLogic, get approved by the GSEs to offer self-employment income automation.

“LoanBeam really had a lock on the tax return evaluation piece but I think they were in danger of getting passed by,” said Bill Corbet, president of Triple Crossing Consulting, and a former senior vice president at Citizens Bank. “Now, I don’t think — knowing LoanLogics’ position on things — that they’re going to let them lag behind, and for LoanLogics, bringing in LoanBeam really fits with where their strategy is.”

Neville declined to comment on how the integration of the two companies’ operations might affect staffing or offices, but generally indicated that while similarities between the two companies’ functions exist, there aren’t a lot of redundancies.

“They’re partners with a GSE, and we are too, but in a totally different area,” he said, referring to LoanLogics’ automation of the process through which lenders are able to sell the rights to loan payment cash-flows to a separate investor at the same time they deliver a mortgage to Freddie Mac. ”Our technology teams speak the same language, and we’ve got some overlapping clients but we also have quite a few who are not LoanBeam customers, and vice versa, so there are opportunities to gain relationships there.”

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