Och-Ziff Capital Management Group LLC (OZM), a New York-based hedge fund firm managing $33.3 billion in assets, said Wednesday that it's gearing up to market a new mortgage fund that will buy whole mortgages -- particularly troubled ones. The move makes Och-Ziff the latest to line up in what appears to be an increasingly crowded market for troubled residential mortgages. The new fund would leverage Och-Ziff's investment into subprime mortgage servicing; the firm bought a controlling interest in Residential Credit Solutions roughly two years ago. RCS was itself borne out of an acquisition of the servicing platform and assets of the former Aames Financial Corp., with Och-Ziff and Redfin, a New York-based buyout group, backing the original deal. Via MarketWatch:
"Given the opportunities we are currently seeing to acquire pools of assets at attractive levels, we are close to marketing this opportunity," [CEO and chairman Dan] Och said. "The mortgages we have purchased to date have been done through this platform, which limits our exposure to the equity investment we have made alongside our partners."
So far, the firm has been buying mortgages via its flagship $19.9 billion OZ Master Fund. In February, Och told investors that the funds had allocated 10 percent of its investments to "credit strategies" -- technical speak for buying up whole mortgages, mostly. At the time, Och explained the strategy as one the company had been planning on for some time. "One of the tenets that this firm was founded on is the concept that luck is when preparation meets opportunity," he said. Disclosure: The author held no positions in OZM when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.