NerdWallet enters the mortgage broker world with acquisition of Next Door Lending

California-based personal finance company NerdWallet has struck a deal to acquire brokerage firm Next Door Lending. Jonathon Haddad, chairman and CEO of the Association of Independent Mortgage Experts (AIME), is one of the owners of Next Door.

As part of the deal that closed Oct. 1, NerdWallet is paying $1 million in cash for the outstanding equity interests of Next Door. It is also offering $3.5 million in performance-based earnout awards to certain Next Door employees. The earnout will be reported as compensation expenses through 2028 and subject to continued employment with the company. 

The Nationwide Multistate Licensing System (NMLS) shows that Michigan-based brokerage firm Next Door had 61 sponsored loan officers as of Thursday, along with four branches in Arizona, Nevada, Ohio and Texas.

According to filings with the Securities and Exchange Commission (SEC), NerdWallet said the deal allows the company to “provide mortgage shoppers with more hands-on guidance. ” 

Tim Chen, chairman, CEO and founder of NerdWallet, told analysts during an earnings call on Tuesday that the acquisition is expected to contribute ”approximately 1 to 2 percentage points of growth to our Q4 ’24 revenue outlook.” NerdWallet expects to deliver fourth-quarter revenue in the range of $164 million to $172 million .

“I have really enjoyed getting to know Next Door Lending’s principals, Doug [Liska] and Jonathon, through this process,” Chen said. “They are kindred spirits who bootstrap their business and share our focus on operational efficiency as well as a consumer-first orientation with the customer reviews to match.

“While the upfront deal consideration is small, the strategic alignment presents a significant opportunity for us to drive better outcomes for consumers, lenders and NerdWallet.”  

Chen believes the acquisition “will enable us to build deep and reoccurring relationships with consumers and take more market share while improving mortgage unit economics.” 

According to Inside Mortgage Finance estimates, the broker channel accounted for a mortgage market share of slightly more than 18% from January 2024 to June 2024, lower than that of the correspondent (28.5%) and retail (53.3%) channels. The analysis includes first-lien mortgage originations. Brokers originated $79 billion in mortgages in Q2 2024, up from $62 billion in the previous quarter. 

AIME named Haddad as chairman and CEO in January to replace Katie Sweeney. He is a relative newcomer, joining the broker channel in 2020. Before that, he spent six years at Quicken Loans.