Guild Mortgage’s acquisition of Academy Mortgage Corp. is expected to expand the retail lender’s presence in Western states and also bring in expertise with builder products, Guild CEO Terry Schmidt said in an exclusive interview with HousingWire. 

With the acquisition of Academy, Guild will be onboarding nearly 200 branches and 1,000 new employees, about 600 of which are loan officers. Approximately 200 employees will be laid off, the majority of which are based in Academy’s home office in Draper, Utah, Schmidt said. Final decisions on these employees are still being worked out based on the needs to wind down the current pipelines and close out the Academy business, she said.

For the employees making the transition, Guild will “typically try to maintain what they have as long as the compensation is compliant,” Schmidt said.

HousingWire reported on the acquisition on Tuesday, which was confirmed by the companies later that afternoon. It’s the largest acquisition to date for retail lender Guild, which has closed six deals since 2021, including last year’s purchases of Legacy Mortgage, Cherry Creek Mortgage and First Centennial Mortgage.

The acquisition of Academy’s retail assets is scheduled to close by the end of February. Academy is expected to cease making mortgages on or before the end of April, according to documents sent to regulators and reviewed by HousingWire. Academy branches will operate as a division within Guild and transition to the acquirer’s brand. 

Schmidt said that during M&A transactions, Guild generally hires the sales teams and their operational support staff. Job cuts are usually made on back-office positions that overlap with existing structures.

According to a notification sent to Academy employees who will be part of the layoffs, the company will pay regular wages through April 15, with paid time off accruing until then, and unused PTO balances will be paid out with a final check on April 17. No severance payments will be made beyond April 15 for “those whose positions have been eliminated,” the notification stated.

Deal rationale

According to Schmidt, Guild and Academy “have kept contact for many years” because the companies have a “very similar retail platform,” resulting in rumors of a merger over the past four or five years. But she said there was no “serious talk” about an M&A deal until the end of 2023 amid a depressed mortgage market.

“They have offices across the country, but they’re more focused on the Western states. In the Western states, with the addition of Academy, our market share is probably over 2%,” Schmidt said. “We’ve got a healthy market share there and it’s just going to help us continue to expand across the country.”

Aside from geographical expansion, Academy also brings expertise in the construction loan space for builders, which represents 25% to 30% of its business, according to Schmidt. 

Guild, which has originated and serviced residential mortgages since 1960, reached about $15 billion in sales volume last year, according to Inside Mortgage Finance estimates.

Academy’s loan production represents an approximate 25% increase in annual origination volume, according to Guild estimates of third-quarter 2023 volumes. The combined enterprises would represent 1.3% of the retail market share among nonbank retail mortgage lenders, ranking eighth nationally. 

“Joining Guild provides new opportunities for our team to access Guild’s industry-leading product suite and leverage Guild’s robust reputation, technology, and servicing platform while strengthening both organizations’ focus on people, purpose, productivity, and prosperity,” Academy CEO Adam Kessler said in a statement. 

Kessler will join Guild’s senior leadership team through the transition and newly combined organization.  

Regarding Guild’s next steps in the M&A arena, Schmidt said that “there’s still activity” and “we still have a pretty healthy pipeline.” The market, according to her, “is still going to be challenging through a big part of this year.”

If all of Academy’s producing loan officers join Guild, the San Diego-based lender will have more than 2,100 LOs in total.

“It’s a good time for us to continue to build market share, invest in good people and continue to grow,” Schmidt said.