Nerdwallet acquired Next Door Lending, a mortgage brokerage owned by Jonathan Haddad, the CEO of the Association of Independent Mortgage Experts.
The personal finance company paid $1 million in cash for the brokerage, a filing with the Securities and Exchange Commission shows. The deal closed Oct. 1.
Under the purchase agreement, certain employees of NDL can also earn up to an aggregate of $3.5 million of performance-based cash earnout awards.
NDL is expected to contribute 1% to 2% of revenue growth in the fourth quarter to Nerdwallet's bottom line, the company said in its third quarter earnings.
The goal of the acquisition is to provide "mortgage shoppers with more hands-on guidance," said Tim Chen, CEO of Nerdwallet, during the company's third quarter earnings call.
"I have really enjoyed getting to know Next Door Lending's principles, Doug [Liska] and Jonathon. They are kindred spirits who bootstrap their business and share our focus on operational efficiency as well as a consumer first orientation with the customer reviews to match," said Chen. "While the upfront deal consideration is small, the strategic alignment presents a significant opportunity for us to drive better outcomes for consumers, lenders and NerdWallet."
"If my mom called me and told me she needed a mortgage, I [would] tell her to call Doug and Jonathon. During our diligence process, we found that they have great rates and great customer service, so letting NDL shop around for you amongst a bunch of lenders is a really great option whether you're buying or refinancing," Chen added.(Liska is the CEO of NDL and Haddad is the owner and president of the mortgage brokerage.)
Four months prior to being sold, Next Door Lending was ordered to pay a fine of $45,000 by a Pennsylvania state regulator for illegally operating in the state without having the license to do so, a filing shows. It is uncertain whether this fine had an impact on the company's desire to sell its business.
Meanwhile, earlier this year, Haddad's appointment as CEO of AIME
Close to 20% of Next Door Lending's business is brought in via trigger leads, according to a post from Haddad in Facebook group Brokers are Better, which is run by AIME leadership.
Michigan-based NDL currently sponsors 61 loan officers, the Nationwide Multistate Licensing System shows. It has branches in Arizona, Nevada, Ohio and Texas.
