Wells Fargo-backed mortgage fintech Maxwell has struck a deal to acquire mortgage solutions provider LenderSelect Mortgage Group from Blue Ridge Bank. The financial terms of the transaction have not been disclosed. 

The deal, announced on Tuesday, expands Denver, Colorado-based Maxwell’s secondary market trading platform and brings hundreds of new clients to the company’s other solutions. That is Maxwell’s first M&A deal since its inception in 2015, and the company has an appetite for more. 

John Paasonen, Maxwell’s CEO and co-founder, said conversations between the company and the sellers started last fall.

“We started talking about partnerships, and that transformed over a few months into LenderSelect joining our platform,” Paasonen said in an interview. “They are bringing to us the scale and the relationship of their business.” 

Richmond, Virginia-based LenderSelect Mortgage Group, which provides mortgage loan solutions to lenders, closed its sale to Blue Ridge Bankshares Inc. in January 2020, growing to a portfolio of over 180 community banks and credit unions. 

According to Paasonen, the expectation is that LenderSelect will enable Maxwell to expand its secondary market trading platform, known as Maxwell Capital. The platform was initially launched in September 2021 in an attempt to reduce the volume of loans in small and midsize lenders’ balance sheets.

“As part of Maxwell, we’ll expand our customers’ access to world-class technology that offers our partners critical leverage in this constricting market while providing even more solutions for them to compete,” Tracy Marks, CEO of LenderSelect, said in a statement.  

Following the transaction, Marks will lead Maxwell Capital, and LenderSelect will add 24 employees to Maxwell’s total 160 headcount.

In turn, Maxwell expects the transaction to grow its market share significantly. 

“We are probably touching about 5% of the loans in the market, not just in the secondary platform, but across all our products. We have everything from the point of sale, quality control to due diligence as we offer services across the entire origination value chain,” Paasonen said.

Maxwell says it has facilitated over $250 billion in loan volume to date and, with the addition of LenderSelect, now partners with more than 400 lenders across the country, enabling them to outperform the market by over 20%. 

Acquisitions are on Maxwell’s radar, according to its CEO. 

“We’re looking at opportunities to grow not just organically but also inorganically,” Paasonen said. “We’re not going to be adding more services. It’s about enriching what we already do and deep in the different spaces.” 

Maxwell has liquidity to support potential acquisitions, according to Paasonen. In October 2021, Maxwell raised $52.5 million in additional funding, only seven months after raising $16 million in a Series B round. 

“We’re well capitalized headed through the cycle and have incredibly supportive investors aligned with the decisions we’re making to grow,” Paasonen said. 

When questioned if Maxwell is profitable, the executive said that as a venture-backed business, Maxwell invests for growth. “We certainly have a path to profitability if we so choose. But our goal is to continue investing in products, engineering, sales and marketing, to grow the business.”  

Maxwell, which markets its product to small and mid-sized lenders, uses artificial intelligence technology to streamline and accelerate the mortgage process for community lenders and their borrowers. 

The company believes that community banks and credit unions are vital financial resources as large banks retreat from towns and cities. However, they compete with lenders with scale and technology to counteract the margin compression driven by high mortgage rates and low housing supply.