JAM Equity Partners, LLC
and its affiliates said Wednesday that the private equity fund manager has agreed to a $2.5 million investment in Wingspan Portfolio Advisors
, a Dallas-based mortgage servicer specializing in highly delinquent loans. Proceeds from the financing will be used to build out the company’s servicing and technology platform, both companies said in a joint press statement; JAM’s investment includes an option to invest additional capital.
first reported on Wingspan's start on Sept. 29
. The servicing shop is led by Steven Horne, a lawyer and servicing industry veteran who previously was a director of servicing risk strategy with Fannie Mae (FNM)
. He also spent nine years as a partner with Sherman Financial Group
, as well as serving as a director of default servicing for Ocwen Financial Corp. (OCN)
“There is a tremendous opportunity for a specialty servicer with a clean platform like Wingspan to assist overwhelmed lenders and servicers perform default management,” said Mike Sekits, partner at JAM. “In addition, we believe there are very few servicers that can match Wingspan’s expertise in servicing distressed second mortgages and low balance first mortgages, a huge opportunity that is especially problematic.”
Horne said his firm, like many other emerging "high touch" special servicers, is focused heavily on employing loss mitigation strategies that some of the larger, more traditional shops often have trouble implementing. “Our mission is to help lenders with loans they have essentially given up on by employing our specialized expertise to return them to performing status," he said. Wingspan, he hopes, will be a "significant participant in the reconstruction of the mortgage industry.”
Wingspan Portfolio Advisors also recently announced a partnership with the American Legal & Financial Network
to provide their unique specialty servicing techniques in parallel with AFN members’ foreclosure actions.
AM Equity Partners is an affiliate of Jacobs Asset Management, an established, highly successful money manager with approximately $375 million under management. Founded in 1995, JAM Partners’ investment objective is to generate maximum appreciation through a hedged portfolio of mostly public equity securities with a focus on U.S. financial stocks. Since inception, JAM Partners has generated a net return of 708% -- or 16.6% annualized -- while the S&P 500 has produced an 8.3% annualized return.
JAM Equity Partners manages two investment funds with $74.5 million in initial committed capital through November; one fund is still raising capital through a second closing expected in Feb. 2009. The company focuses exclusively on the financial services industry, according to company materials.
Wingspan is far from the only entrant competing for market share in the burgeoning "high-touch" space -- and with Credit Suisse analysts forecasting as many as 8.1 million foreclosures in the next four years, there are likely to be further entrants into the space, as well. Back in April, HW
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. Other firms, including San Diego-based National Asset Direct, owns its own “high-touch” servicing shop called iServe Servicing
, which serves as the back end of its whole loan purchasing operation and a third-party platform for outside investors.
Even some of the traditional players in the servicing space have begun to push into the "high-touch" segment this year, with GMAC mortgage services arm Residential Capital, LLC saying in August
that it would look to build it's own platform in-house catering to investors looking for more aggressive servicing on their loans.
Paul Jackson at email@example.com
Disclosure: The author held no relevant investment positions 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.