FTC votes to block ICE Black Knight deal, citing higher home buyer prices
The Federal Trade Commission sued Intercontinental Exchange Inc. to block its proposed acquisition of Black Knight Inc., a rival mortgage software company. It claimed that the deal would give ICE a significant market share in loan origination software. This software is used by lenders to manage their home loan workflows. FTC stated that the combined company would have the incentive to encourage customers to use its mortgage services over those offered by competitors. The agency voted 4-0 in favor of filing the complaint in the agency’s in-house court. The complaint was not immediately available. Patty Brink (acting deputy director of FTC’s Bureau of Competition) stated in a statement that “buying a home is an important investment towards building financial security for many Americans.” This deal would reduce competition in key areas, which could ultimately increase costs for both home buyers and lenders. “ICE is owned by Ellie Mae Inc., a mortgage software company whose Encompass platform can be used to originate loans. Black Knight’s Empower is second in this market. The companies announced Tuesday that they would sell Black Knight’s Empower business, which will reduce the deal value to $11.7 million, in an effort to address antitrust concerns. The FTC stated that the Empower business was not enough to replace “intense competition” between ICE, Black Knight. Both companies offer a variety of mortgage products. ICE is the owner of the Mortgage Electronic Registration Systems (or MERS), the national database that tracks mortgage servicing rights. Black Knight’s MSP, the largest mortgage servicing platform, controls 56% of the market. Optimal Blue, which helps brokers and lenders price mortgages, helps lenders price them. The deal was announced by ICE and Black Knight in May to create a platform that assists lenders at all stages of a mortgage, from the initial home search to loan servicing and default. They tried to minimize any overlaps by telling investors that ICE is a complementary business that serves different parts of the mortgage industry.