Toronto, ON, May 24, 2002 - Basis100 Inc . (TSX:BAS), a technology solutions provider for the financial services industry, today announced that it has agreed to acquire 100 percent of the shares of Mortgage Risk Assessment Corporation (MRAC), subject only to regulatory approval. While Basis100 is the leading provider of automated property valuations (AVM) to the U.S. mortgage lending market, with over 1,700 customers, MRAC has the industry-standard, index-based AVM for the securitization segment of that market, with over 300 customers. With this acquisition, Basis100 now has an estimated 50 percent marketshare, and has direct involvement from the mortgage point-of-sale to the investment community. This positions Basis100 to aggressively target additional segments of the mortgage industry, including servicing, default, new business sourcing, and portfolio analysis. The Company intends to leverage the combined customer base and integrate BasisXpress™ (a mortgage processing solution) and BasisXchange™ (a trading system) to create an end-to-end mortgage solution. The transaction is expected to close on May 31, 2002.
"By integrating MRAC's index model with Basis100's property-specific model, Basis100 will have the most complete and accurate AVM in the country. This will allow us to expand the usage and application of the AVM in the mortgage market," said Gary Bartholomew, chairman and CEO, Basis100. "Over $5.4 billion US is currently being spent on property valuation in the U.S. annually. Growth in the use of automated property valuation is inevitable, given the accuracy, significantly lower cost, and increased comfort levels experienced by the mortgage industry. The AVM market alone is projected to be about $50 million US by the end of this year, growing at 35 - 50 percent annually. As the market leader, we expect to build on our combined share of the AVM market to drive exponential growth, both in revenue and earnings."
MRAC manages a nation-wide database of residential property characteristics, related financial sales and lending transactions and contains information for over 54 million properties in 1,300 counties in 46 states. The database is used to generate products that provide risk assessment information used to create, manage and trade pools of mortgage-backed securities, marketing lists for lead generation and collateral risk analysis associated with mortgage securitization. Among MRAC's customers are Bear Stearns, Lehman Brothers and Goldman Sachs.
"Combining the complementary technologies of MRAC's index model with our leading property-specific (hedonic) model allows us to enter new markets and deliver an increased services our customers. This will move us towards our goal of being a leader in every property valuation market segment, including origination, securitization, default, portfolio analysis, new business sourcing and servicing," said Joseph J. Murin, president and COO, Basis100. "We anticipate a smooth integration process and expect to realize substantial economies of scale from this acquisition."
"We are very enthusiastic about the prospects this acquisition will bring to both MRAC and Basis100 customers. The combination of these two models will be extremely powerful," said Chuck Ramsey, chairman and CEO, MRAC. "This will be the first generation of the 'super' AVM and our clients will benefit from better results in both hit rate and accuracy."
"We intend to be a significant player in the U.S. mortgage industry," said Bartholomew. "We feel that we are the only company positioned to connect the originator to the capital markets."
Basis100 agreed to acquire all the outstanding shares of MRAC for a purchase price of $7.5 million US in a combination of cash and Basis100 stock. Based on meeting aggressive forward revenue and EBITDA performance targets, the MRAC shareholders could earn up to an additional $6 million US in cash and $1.5 million US in shares over the two years following the completed acquisition.
A conference call will be held on Tuesday, May 28, 2002 at 4:00 p.m. EST to discuss the MRAC acquisition further. Details will follow in a separate release.
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes", "plans", "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.
Mailing Lists:
MRAC provides a lead generation service for the mortgage
and financial industries. A direct mail/telemarketing list can be customized to
solicit homeowners for home equity and refinancing loans. Mortgagelists.com
, an online count and order system, is the Internet tool used
to generate these leads.
Real Estate and Lien Manager:
REALM is a Windows™-based system to
provide primary (purchase and refinance) and secondary (second mortgages and
home equity) lien data on the properties in the MRAC database.
Non-Agency Portfolio Scoring System:
NAPSS is a Windows™-based
software system designed to provide detailed analysis of non-agency securitized
portfolios and whole loan portfolios. Loan data for this system is collected
from major issuers on a monthly basis. This data is enhanced by MRAC's property
database of historic sales and loan information, proprietary market values, and
default and prepayment analysis.