During one of their many outings together, William and Isolt discovered a grisly scene just outside the Plymouth settlement: two dead wizards and their badly injured young sons. Since it's against a Pukwudgie's nature to help a human, William refused to help the young boys. Isolt, however, didn't give up so easily. She nursed them back to health with the help of a No-Maj named James Steward.
James had befriended the boys and their parents on the ship to America. Upon their disappearance, he went looking for them. Instead, he found Isolt. The two eventually fell in love and constructed a small home for themselves on the top of the Greylock. "Isolt christened her new home ‘Ilvermorny’ after the cottage in which she had been born, and which Gormlaith had destroyed," Rowling wrote.
As the boys, Chadwick and Webster, grew older, Isolt promised them that when they reached 11 years old, she would find them wands and start a school of magic right there in the small cottage. On Chadwick's 11th birthday, Ilvermorny School of Witchcraft and Wizardry was born.
Chadwick insisted that there should be four houses, similar to Hogwarts, the school Isolt had told him so much about. When it came time to name them, they each chose their favorite magical beast. "For Chadwick, an intelligent but often temperamental boy, it was the Thunderbird that can create storms as it flies. For argumentative but fiercely loyal Webster, it was the Wampus, a magical panther-like creature that was fast, strong and almost impossible to kill. For Isolt, it was, of course, the Horned Serpent that she still visited and with which she felt a strange sense of kinship," Rowling wrote.
James, a No-Maj, was at a loss. He didn't know much about magical creatures. However, he quite loved the stories his wife told him about a curmudgeon named William, so he decided on the Pukwudgie. "Thus were the four houses of Ilvermorny created, and while the four originators did not yet know it, much of their own characters leaked into the houses they had so light-heartedly named," Rowling added.
So, think of the four houses of Ilvermorny like this: Horned Serpent favors scholars, Wampus is know for its warriors, Pukwudgie is a house for healers, and Thunderbird speaks to adventurers.
Ilvermorny soon outgrew its humble origins, as news of its existence began to spread to tribes across the land. In order to accommodate her students, Isolt began to make wands. She used Horned Serpent hair to make wands for Chadwick and Webster and learned to use a variety of cores, including Wampus hair, for her other students. Isolt, a Parseltongue, always felt a kinship with the Horned Serpent — and her instincts would prove to be invaluable when Gormlaith's return threatened to destroy Ilvermorny and her family.
Alas, Gormlaith was no match for the powerful Horned Serpent wands — or the loyal albeit curmudgeonly William, who shot the wicked witch with one of his poisonous arrows to protect Isolt, William, and their children from harm. Since that very day, William and his fellow Pukwudgies have served as Ilvermorny's private security team, maintaining the grounds and protecting its students.
As for Isolt and her family, Chadwick authored Chadwick's Charms Vol. I-VII, which are now required texts at Ilvermorny. He married a Mexican Healer named Josefina Calderon, and "the Calderon-Boot family remains one of wizarding America’s most prominent today." (Might we see this surname pop up in Fantastic Beasts and Where to Find Them?) His brother Webster became an Auror and eventually returned to Europe. His descendants would go on to be educated at Hogwarts.
Isolt and James's two daughters, Martha and Rionach, had two very different paths. Martha was a Squib who married a non-magical man and lived the rest of her days as a No-Maj. Meanwhile, Rionach taught Defense Against the Dark Arts at Ilvermorny and never married for fear of carrying on the Slytherin legacy.
Similar to Hogwarts, students of Ilvermorny are required to wear school robes -- blue and cranberry -- fastened by a gold Gordian Knot, in memory of Isolt's mother. The students also engage in inter-house competitions. Unlike Hogwarts, however, wands are distributed to students after the sorting ceremony. (The wands tend to choose their owners.) And it's also possible for a student to be chosen by more than one house. If that happens, the student gets to decide which house to join.