The FTC is expected to challenge the deal over concerns it would create a near-monopoly in the market for loan origination software and give a single company control over many of the tools that lenders use to issue or refinance home mortgages, according to the people, who spoke anonymously to discuss an ongoing probe. 

Exchange operator ICE owns mortgage software company Ellie Mae Inc., whose Encompass platform is the most widely used for loan origination. Black Knight’s Empower is the second-biggest player in that market. ICE also owns the Mortgage Electronic Registration Systems, or MERS, the national database that tracks mortgage servicing rights, while Black Knight’s MSP is the largest mortgage servicing platform, controlling about 56% of the market.

The companies said the deal would create a platform to help lenders throughout all stages of a mortgage from a customer’s initial home search through loan servicing and potential default.

Deal opponents have alleged the merged company would have the incentive to bundle all of its services, shutting out rivals that only offer software for one part of the mortgage workflow. The Community Home Lenders of America, which represents smaller lenders, and Representative Maxine Waters of California, the top Democrat on the House Financial Services Committee, both expressed concerns about the merger, since any increased costs for mortgage servicing or loan origination are likely to be passed on to home buyers.

The mortgage software merger would be the 11th deal challenged by the FTC since Chair Lina Khan took over leadership of the antitrust agency in June 2021. Khan has urged the agency to take a more aggressive stance on mergers, particularly those in rapidly evolving technology markets where data is a key element.

The FTC declined to comment. Black Knight and ICE didn’t immediately respond to a request for comment.

Politico earlier reported that the FTC was preparing a suit.