FTC to challenge $13 billion ICE/Black Knight mortgage deal

The Federal Trade Commission is expected to sue Intercontinental Exchange Inc. of the proposed $13.1 billion takeover of mortgage software rival Black Knight Inc. on Thursday, according to two people with knowledge of the matter.

The FTC is expected to challenge the deal on concerns that it would create a near-monopoly in the market for loan origination software and give one company control over many of the tools that lenders use to issue or make loans. -refinance home loans, according to the people, who spoke on condition of anonymity to discuss the ongoing investigation.

Exchange operator ICE owns mortgage software company Ellie Mae Inc., whose Encompass platform is the most widely used for loan origination. Black Knight’s Empower is the second largest player in that market. ICE also owns Mortgage Electronic Registration Systems, or MERS, the national database that tracks mortgage servicing rights, while Black Knight’s MSP is the largest mortgage servicing platform, controlling about 56% in the market.

The companies said the agreement will create a platform to help lenders at all stages of a mortgage from a customer’s initial home search through loan servicing and potential default.

Opponents of the deal say the combined company has an incentive to bundle all its services, shutting out rivals that only offer software for one part of the mortgage workflow. Community Home Lenders of America, which represents small lenders, and Representative Maxine Waters of California, the top Democrat on the House Financial Services Committee, both expressed concerns about the merger, as any increase in costs for of mortgage servicing or loan origination is likely to be passed on to home buyers.

The mortgage software merger is the 11th deal challenged by the FTC since Chair Lina Khan took over as head of the antitrust agency in June 2021. Khan urged the agency to take a more aggressive stance on mergers, especially those are in rapidly developing technological markets where data is an important element.

The FTC declined to comment. Black Knight and ICE did not immediately respond to a request for comment.

Politico earlier reported that the FTC was preparing a suit.

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