Sourcepoint snags StoneHill ahead of a rise in mortgage regulatory scrutiny

The Situation: Lending institutions have seen some of the most stringent regulatory scrutiny since the global financial crisis. During the pandemic, mortgage servicing in the US was given a breather in the face of government forbearance programs. However, as the relaxations expire, regulatory scrutiny is expected to increase. Quality control and due diligence across the mortgage value chain is on top of lenders’ minds.

There is an ongoing clamor in the mortgage industry around balancing effective mortgage processing, securitization, and servicing with the use of cost-saving and experience-generating emerging technologies amid ballooning digital transformation. This calls for synergistic collaboration between the best-of-breed solutions providers instead of time- and resource-intensive in-silo innovation and development. This collaborative approach helps enterprises quickly build an adept, experienced team and decrease costs. HFS previously spoke to Sourcepoint about its transformational journey from outsourcing to innovation in the quest to revolutionize mortgage servicing. Now we will delve into its agreement to acquire The StoneHill Group.

StoneHill’s strength in the secondary market and quality control will add value to Sourcepoint’s existing offerings

Sourcepoint has extensive experience with loan originations, collateral delivery, and servicing. However, in response to ongoing regulatory pressure, it recognized an increasing need for expertise in securitization, ratings, and due diligence for end-to-end loan fulfillment and mortgage servicing. This recognition led Sourcepoint to The StoneHill Group, a provider of loan quality control and due-diligence services enabled by proprietary technology platforms. Stonehill has been active in the mortgage industry for more than 25 years, servicing more than 370 clients in the US. StoneHill’s core capabilities include quality control services, due diligence, and end-to-end fulfilment services. It provides three platforms for clients namely, Loan Evaluation System, Mortgage Driver, and Due Diligence Platform. Its mortgage platforms are trusted for quality control, document management, and due diligence by companies including Kroll and Fitch, Moody’s DBRS, and S&P Global.

Sourcepoint is set to gain more than just a mortgage platform; it’s an opportunity to access mid-market lenders

StoneHill’s 370-client portfolio will be a significant boost for Sourcepoint’s bottom line and client base because there is limited client overlap between the two companies. StoneHill’s client base includes middle-market banks, credit unions, independent mortgage bankers, and housing finance authorities, providing a strong opportunity to cross-sell. Resource-wise, StoneHill brings a 150-strong team of associates. StoneHill has shown triple-digit growth since 2019, and it boasts a strong balance sheet, profitability, and tenured client base, positioning it well to meet evolving client needs in risk management—and then there is the tech.

The Bottom Line: Sourcepoint’s acquisition of StoneHill is timely; the mortgage industry is poised to shift from origination-palooza to securitization and servicing.

Sourcepoint already offered a broad array of people-plus-tech origination through servicing capabilities. The addition of StoneHill rounds out Sourcepoint’s proposition, adding critical expertise in quality control and due diligence and increasing value across the entire mortgage value chain. Lenders of all sizes should take note of Sourcepoint’s enhanced capabilities, particularly as regulatory scrutiny of servicing ramps up as the pandemic origination boom shifts to secondary markets and a heavy servicing focus.