Carrington Mortgage Services will acquire Valon Mortgage and adopt the fintech's servicing software to handle its book of Ginnie Mae loans, the firms said Thursday.

The deal will expand Carrington's servicing portfolio by around 800,000 loans, according to a press release, marking yet another major industry play for servicing. Carrington said it's buying Valon Mortgage in collaboration with an unnamed private equity partner.

The announcement was first reported by Housingwire. 

Valon meanwhile suggested it will no longer service loans following the deal. 

"This transaction is structured to let us do what we always intended: go all-in as a technology company," said Linda Du, president and co-founder of Valon, in a statement. "We're not exiting the mortgage industry. We're choosing to power it."

The fintech's portfolio, composed mostly of loans which Valon subservices, represents approximately $197 billion in unpaid principal balance, a spokesperson for the company confirmed to National Mortgage News. 

In making the deal, Carrington said it wanted to grow its servicing book, and it lauded the ValonOS software to handle the servicing of complex government loans. 

"We've seen what Valon has accomplished in a remarkably short period of time, and we believe they represent the future of Ginnie Mae servicing technology," said Andrew Taffet, CEO of The Carrington Companies, in a press release. 

Making moves

Carrington said Valon's artificial intelligence-powered servicing software will lessen manual reconciliation and deliver faster borrower resolution.

Valon has raised $290 million in venture capital since it was founded in 2019. Rithm Capital took a minority stake in the company earlier this year, and the Newrez parent said it would implement ValonOS next year.

The Southern California-based Carrington is a large multichannel lender, and recently added consumer direct operations with its acquisition of Reliance First Capital. It claimed earlier this year to hold over $200 billion in unpaid principal balance from over 1 million customers. 

Terms of the Carrington deal for Valon Mortgage were undisclosed.

Mortgage giants have an increasing appetite for servicing rights, and the industry's biggest firms have spent billions of dollars in the past year to expand their books. Rocket Cos. paid over $14 billion for Mr. Cooper last year, while United Wholesale Mortgage has recently made multiple bids to compete with CrossCountry Mortgage for Two Harbors.