Distressed CRE Specialist Moves into Residential Mortgages

In what may be a sign of market trends to come, or just a signal of the enormous opportunity emerging for bad mortgages, a CRE specialist said Monday morning that it’s headed into distressed residential real estate — the latest firm to announce its intentions in an increasingly crowded space for bad loans, and the mortgage-backed bonds and properties associated with them. A joint venture between Hilco Real Estate LLC and a unit of Moving Station, LLC will look to purchase residential homes, mortgages and unsold developer assets directly from lenders, the company said in a press statement. The investment fund, managed under the auspices of Hilco Residential Partners LLC, is interesting in that it will go after all forms of bad debt and assets tied to any form of real estate. Hilco is a well-known player in the retail, commercial, and industrial real estate “restructuring” marketplace, having worked with Sears Roebuck when the company decided to phase out its catalog operation and consolidate operation centers, among other restructurings. But residential, single-family homes and the mortgages behind them? Not so much. That’s where Hilco’s partner in the joint venture, Moving Station, comes in. The company, a relocation specialist, operates Promisor Asset Recovery Services, an REO outsourcer that claims on its Web site to have “created the national asset management service industry by providing the first national service designed to effectively manage an REO asset through its resale and closing.” It’s unclear, however, how long the company has actually been in business; a senior bank executive that spoke with HW said she’d never heard of the company, despite its claims. Over-the-top and unsupported claims are common in the default and REO business, she said. “I remember an agent in Chicago once claiming he ran a nationwide REO shop,” she said. “And it was just one guy; his idea was to call other agents and strong arm them into splitting commission for the ‘service’ of referring them a corporate listing.” Over-the-top claims notwithstanding, the partnership of a CRE firm and a corporate relocation specialist underscores an emerging reality in the real estate industry — bad debt is a growth industry right now, and the firms that specialize in debt and property acquisition likely see fewer differences between commercial and residential real estate than they used to. For more information, visit http://www.hilcorealestate.com and http://www.movingstation.com.

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