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Investments

Cherry Hill Mortgage closes on IPO

Will use proceeds to buy MSRs

squeeze money

Cherry Hill Mortgage Investment Corp., which is managed by an affiliate of Freedom Mortgage Corp., closed on an initial public offering of 6.5 million shares of common stock Wednesday, with shares listed at $20 per share.

But it’s what Cherry Hill plans to do with the proceeds that closely mirrors ongoing market trends.

Cherry Hill, a residential real estate finance firm, expects to use returns from the sale to acquire interests in mortgage servicing rights from Freedom Mortgage. Proceeds from a concurrent sale of one milion shares of common stock also will be used to invest in MSRs.

The move is designed to bring more liquidity to the housing industry, noted Stan Middleman, CEO of Freedom Mortgage.

He noted that both firms plan to invest in MSRs, making it a "fundamental part of our business platforms."

Middleman told HousingWire that Cherry Hill is trying to create liquidity through MSR investments. The reasoning behind this strategy is simple: "One of the problems lenders face is access to the capital markets," he explained. Cherry Hill enacted its current strategy to alleviate those concerns, Middleman said.

"We feel there is a trend to have more private money coming back into the mortgage space," he added. "And we think Cherry Hill is positioned to be a part of that."

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