New American Funding Nears Acquisition of Draper & Kramer Mortgage Corp in Strategic Industry Move

Last updated 03/15/2024 by

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Summary:

New American Funding (NAF) is reportedly close to finalizing the acquisition of Draper & Kramer Mortgage Corp. (DKMC). This move involves NAF taking over DKMC’s residential mortgage division, as DKMC is interested in exiting this sector. Despite no official announcement, discussions between NAF executives and DKMC staff have occurred. Read more on the results of the potential merger and its impacts on NAF’s strategic growth.

In a significant move within the mortgage industry, New American Funding (NAF), a prominent mortgage lender, is reportedly on the verge of acquiring Draper & Kramer Mortgage Corp. (DKMC), a Chicago-based retail mortgage company, according to various sources.

These sources indicate the acquisition discussions are in their final stages and should conclude in the coming days. The acquisition involves NAF taking over the residential mortgage division of Draper & Kramer, a longstanding property and financial services company founded in 1893 by Arthur W. Draper and Adolph F. Kramer.

DKMC, known for its diversified property management and commercial finance operations, is reportedly looking to divest its residential mortgage sector.

A significant discussion between NAF’s leadership and the sales team of DKMC took place on January 18, marking a crucial step in the acquisition process.

One DKMC sales professional revealed that there had been speculation about the company’s board intending to sell the mortgage division since the early winter. According to this employee, despite its profitability in previous years, the company faced challenges with furloughs and cutbacks at the start of 2023.

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No longer a viable business model

“The current business model wasn’t sustainable under these market conditions. The board seemed disinterested in maintaining the residential mortgage segment,” the employee disclosed to HousingWire.

While there hasn’t been an official company-wide announcement about the merger and acquisition, certain sales staff have been encouraged by NAF executives to decide on their potential move. Non-sales employees, including processors and underwriters, are also expected to be able to transition to NAF.

Both Draper and Kramer and NAF have yet declined to comment on the acquisition.

Should the acquisition materialize, the combined entity would yield approximately 2,130 loan officers, merging 1,884 from NAF and 251 from DKMC.

NAF, established in 2003 by Patty and Rick Arvielo and headquartered in California, reportedly generated $7.4 billion in originations from January to September 2023, as estimated by Inside Mortgage Finance. Mortgage tech platform Modex indicates a total of $8.2 billion in mortgage loans originated by NAF for the entire year of 2023.

On the other hand, DKMC’s mortgage origination for 2023 stood at around $2 billion, according to Modex. The data shows a predominance of conventional loans at 67%, with purchase loans making up about 84% of their portfolio. DKMC did not feature among the top 100 mortgage lenders in the IMF data for the first nine months of 2023.

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