As Defaults Surge, The Need for 'High-Touch' Servicing Emerges
As hedge funds look to swoop into the mortgage market -- HW's sources suggest that managers see troubled mortgage debt as probably the hottest distressed asset opportunity in a decade -- more than a few new servicing shops are springing to life to handle the increased workload. One such newcomer is Acqura Loan Services, a special servicing outfit that is aiming specifically to target the needs of lenders, hedge funds and investors in distressed debt, according to a press statement released Monday morning. "At this stage in the credit cycle, lenders, Wall Street and MBS/ABS investors realize they are facing a triple threat: the prospect of recession, the credit/liquidity problems and falling home prices," said David Vida, CEO of both Acqura and its parent, the Strategic Recovery Group, LLC. Vida, a former executive at Option One Mortgage Company, said that the players now entering the mortgage space are looking for a different kind of approach to servicing than what traditionally would be expected. "What investors and issuers are looking for now are focused, innovative partners, who can commit to higher service levels and deliver experienced asset managers and the latest technology to achieve better outcomes for both borrowers and investors," he said. Industry insiders that HW spoke with agreed, and said that they feel many traditional servicing outfits are stretched to the limit by both existing processes and a flood of troubled borrowers. "There's a real need right now for a different kind of servicing, the high-touch approach of working with borrowers that many existing shops are sort of constrained in providing," said one source, a hedge fund manager who asked not to be named. "We're looking to make sure that we can protect returns on the assets we acquire, and that means taking a different road in terms of what we want out of the servicers we'll work with." Acqura, which said it began hiring personnel and developing proprietary scoring and servicing technology in mid-2007, currently has three special servicing clients. The company said it specializes in working to develop a customized risk-management solution for each client's objectives, and has focused on hiring only experienced personnel; REO asset managers at the company have an average of 12 years of experience, for example. Acqura isn't the only new entrant into what promises to be a competitive market over the next few years. Phoenix-based Marix Servicing, LLC was founded in February 2007 and has taken a similar tack, employing a "high-touch" special servicing model to help investors manage distressed assets in the subprime mortgage market. Marix is backed by Marathon Asset Management, LLC, a $9.5 billion private equity firm. "Typically, loss mitigation begins when something bad happens," explained Acqura's Vida. "Our approach will allow us to be more proactive in anticipating events, such as resets or deteriorating credit, and to establish a profile and, hopefully, a dialogue with the borrower before the situation escalates." "Our high-touch approach is designed to encourage cooperation from the borrowers, and to offer them customized payment plans and loan modification options to help them stay in their homes, if they want to and can afford their payments," he said. For more information, visit http://www.acquraservicing.com.