ResCap Sets Sights on "High Touch" Servicing Segment
In a nod to just how large a segment distressed mortgages likely now represent, one of the industry's largest servicing operations said Monday it is looking to expand its reach into "high touch" servicing for third parties. And it's hiring a guy pretty well known in the mortgage servicing space to lead the charge, too. GMAC Financial Services' mortgage arm Residential Capital, LLC said it had tapped John Vella as senior vice president and managing director of ResCap's Mortgage Special Operations business. Vella was previously president and chief executive officer at EMC Mortgage, the former Bear Stearns servicing platform that now sits with JP Morgan Chase & Co. (JPM). That Vella left EMC after the JP Morgan acquisition is telling; it also speaks to the large opportunity that now exists in so-called "high touch" servicing in distressed mortgages. The term "high touch" refers to an emerging class of special servicers -- mostly tied to hedge funds and other institutional investors -- designed to push aggressive loss mitigation practices around acquired non- or subperforming loan portfolios. ResCap's Mortgage Special Operations platform provides subservicing and asset management for high risk loans in the United States, Canada and the United Kingdom, and with Vella's hire, the company is signaling a strategic expansion of the business. The company said in a press statement that its focus on high-risk mortgage serivicing comes in response to "a growing demand from hedge funds, investment bankers and other institutional investors for mortgage servicing and loss mitigation of their loan portfolios." Vella will work directly with Thomas Donatacci, senior managing director of ResCap's fee-based servicing business, the company said; both will be tasked with adding headcount to the loss mitigation team, and leading investment into the company's servicing platform to better enable the sort of customization investors tend to be looking for. Not surprisingly, ResCap stressed that it views the servicing of distressed assets as a key growth area for the company (and likely for any servicer in this market, too, as origination volume dries up). As the market for distressed mortgage loans has grown, and is expected to continue to do so, demand from investors for tailored loss mitigation programs has also grown in tandem; yet, HW's multiple sources in the investor market have told us that many traditional servicing shops face strong limitations in customizing loss mitigation programs sufficiently to individual investors' needs. While the largest to do so thus far, ResCap is far from the first such shop to target the distressed mortgage segment with a "high touch" strategy. Back in April, HousingWire covered the launch of Plano, Texas-based Acqura Loan Services, a start up servicing operation dedicated to meeting the customized needs of distressed asset investors in the mortgage space. For more information, visit http://www.gmacsolutions.com. Disclosure: The author held no positions in JPM when this story was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.