Charles Schwab & Co. Inc. Tuesday added mortgage products to its lineup through a partnership with online mortgage broker E-LOAN Inc.
E-LOAN will grant Schwab (SCH)
warrants totaling 13.1 million shares in two installments. The first batch
consists of 6.5 million shares, has a three-year term, and is exercisable at
$3.75 per share, subject to certain exercise provisions. The second batch
consists of 6.6 million shares, has a 3 1/4 year term, and is exercisable at
$15 per share.
Over a four-year term beginning this June, retail Schwab customers will
access E-LOAN’s (EELN)
mortgage products from more than 70 lenders, as well as online rate search,
loan comparison and tracking services. E-LOAN’s customer service
representatives will offer the services.
Schwab currently serves 3.7 million active online accounts with $349 billion
in customer assets.
Daniel O. Leemon, Schwab executive vice president of business strategy, will
become an E-LOAN director. Leemon said his firm conducted
research and found that people who go online would be interested in seeking
a mortgage through schwab.com.
“After an exhaustive review process involving nine companies, E-LOAN emerged
as the best provider. They are a company with a commitment to customer
service, superior technology, a choice-based business model with a breadth
of products, and a strong management team,” Leemon said.
In related news Tuesday, E-LOAN scored $40 million in cash investments from
Charles Schwab Corp., Abbey National, FT Ventures, Benchmark Capital and
Technology Partners. Though stake percentages were not specified, Schwab,
Abbey National, and FT Ventures contributed $10 million each, with Benchmark
Capital and Technology Partners chipping in $5 million each.
The proceeds will be used for working capital and general corporate
purposes.