Pleasanton’s Ellie Mae Buys San Diego’s Del Mar DataTrac for $25.2M

Pleasanton, CA-based Ellie Mae (NYSE Amex: [[ticker:ELLI]]), which provides software used by mortgage lenders to underwrite home loans and related transactions, says today it has acquired Del Mar DataTrac, a privately held competitor in San Diego. In a statement, Ellie Mae says it agreed to pay $17.2 million at closing, with another $8 million in total cash payments due over the next three years.

Del Mar DataTrac has more than 200 customers that use its mortgage origination software to process and fund home loans, manage secondary marketing transactions, and provide other services. The specialized company sells its software mostly to small-to-medium-sized mortgage lenders. Combined, the two companies say their software could potentially process 30 percent of all U.S residential mortgages this year.

The deal marks the culmination of the second successful turnaround at Del Mar DataTrac for TVC Capital, a small San Diego private equity firm, and Jeb Spencer, a TVC co-founder and managing partner. The local investment firm paid about $7 million in 2001 to acquire Del Mar DataTrac, and Spencer served in a leadership role while the company grew dramatically during the mortgage industry boom. TVC sold Del Mar DataTrac in 2005 to Fiserv, the Wisconsin financial services giant, for an estimated $24 million.

Del Mar DataTrac fared poorly under Fiserv, however, as home prices nationwide peaked in mid-2006 and colossal losses in the subprime market drove a collapse of the nation’s housing and mortgage industries. TVC Capital bought the company back from Fiserv for an estimated $4 million in early 2008.

Ellie Mae says Del Mar’s operations will remain in San Diego. Spencer, who was Del Mar’s chairman, has joined Ellie Mae’s board of directors, and Del Mar president Rob Katz has been named Ellie Mae’s executive vice president of product strategy.

Ellie Mae CEO Sig Anderman says he founded the mortgage management software company in 1997 to automate the loan origination process and streamline the business for its customers. “So the addition of the impressive Del Mar team and customer base is a big milestone for us.”

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.