The American Home Loan Mortgage Corporation, the credit card giant that’s been the go-to provider for loan applications for years, is getting a $2 billion infusion from a group of investors led by Goldman Sachs.
The group, led by Blackstone Group LP, announced Monday that it will spend $6.2 billion to acquire the lender and its assets, which include more than 2,300 mortgage lenders.
The move will help make the company more competitive with its rivals, including Home Capital Group Inc., Wells Fargo & Bank of America Corp., Citigroup Inc. and Bank of New York Mellon Corp. Blackstone, which operates the mortgage business, is also expected to pay $1.5 billion for a stake in the company that handles consumer loans.
The deal will allow the two companies to expand the portfolio of mortgage loans that they sell, which could add another $4 billion to the total.
Blackstone also plans to sell other assets, including its stake in Home Capital, and will pay $3.3 billion to buy the lender’s debt.
Blackstones chief executive officer Stuart Varley said in a statement that the acquisition of Home Capital will help bring “innovative technologies” to the lending industry, which will allow lenders to offer more affordable, low-interest credit.
Home Capital’s loans have grown from $50 billion in 2007 to more than $200 billion in 2017, according to data compiled by Bloomberg.
It has a long-standing business in consumer credit, including payday loans and home mortgages.
The company was founded in 1967 and is a subsidiary of CitiGroup Inc., the largest U.S. bank.
The deal with Blackstone will help ensure that Home Capital is not disrupted by new entrants in the industry, said Jeff Gertz, the group’s chief executive.
Blackstones investment will “help us continue to provide our valued customers with outstanding products,” he said.
Home Equity Capital, another lender, said in April that it planned to exit the market by the end of 2019.
The acquisition comes as Home Equity Group has struggled to generate a profit amid a decline in home loans and the financial crisis.
The company, which has been struggling to maintain its profitability despite its acquisition of a majority stake in Bank of the West Inc., also announced that it would exit the mortgage market in 2019.
It is expected to shutter at least five mortgage offices in 2018.