Would you like a mortgage with your credit card?
The combination of the two consumer financial products in one business isn't new, but the forthcoming team-up of the Discover Card and LendingTree Loans is.
Riverwoods, Ill.-based Discover Financial Services, one of the larger U.S. credit card companies, has announced plans to acquire Home Loan Center, a Tree.com subsidiary that operates as LendingTree Loans. The $56 million deal adds residential mortgage loans to Discover's line of consumer banking services, the company said in a press statement.
In addition to credit cards, Discover already offers personal loans, student loans, deposit certificates, savings accounts, money market accounts and Roth individual retirement accounts through its Discover Bank subsidiary. Now add mortgage loans to that list.
The company intends to originate residential mortgages that will be sold to investors in the secondary market. The loans will be available throughout the U.S.
Carlos Minetti, president of consumer banking and operations for Discover, said in the statement that the company was acquiring "a proven operating platform" that it will be able to "scale" by leveraging its brand and lending expertise.
Translated, that means Discover intends to use its own widely recognized brand name and experience in other types of loans to expand the existing LendingTree mortgage origination business.
"This will enable us to expand our line of banking products and provide home loans to consumers," Minetti said.
Discover didn't announce specific marketing plans, but it's a safe bet that the company's credit card customers will start seeing ads and promotions for home loans sooner or later as a result of the acquisition.
LendingTree, a leaf on Tree.com, will continue to focus on mortgage lead generation, which funnels prospective borrowers' contact information to lenders and mortgage brokers through the company's online loan-shopping service.
The acquisition is expected to close by the end of 2011, subject to shareholder and regulatory approvals.
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