RCS Receives Servicing Approval from Fannie Mae
Growth continued onward Tuesday in the burgeoning third-party servicing market, with Fort Worth-based Residential Credit Solutions, Inc. announcing that it had received approval to service loans owned or guaranteed by Fannie Mae (FNM). The company, backed by private equity firm Equifin Capital Partners and Och-Ziff Capital Management, is among a growing number of third-party servicers looking to establish market share in the so-called "high touch" servicing segment. So-called "high-touch servicers" focus on staffing loss mitigation operations to reach out to troubled borrowers and work with them on loss mitigation options, a function that is often critical for investors acquiring sub- and non-performing mortgage notes. Larger servicers in the traditional market, according to a large number of hedge fund and other players in the acquisitions space that spoke with HousingWire, often see investors as either too small to merit a customized servicing platform, or too demanding relative to existing infrastructure. "You tend to hear 'we do things this way' from a larger servicing shop," said one investor, whose fund has been focusing on acquiring loans in the Southeastern US. "But when we buy, so much of the profit can be had from simply increasing contact rates to get a deal done. It's part-and-parcel of how we operate." That need has created a burgeoning market for special servicers that can handle customizable programs for investors. Some of the emerging players in this market are new -- RCS, for example was founded in Dec. 2006, and services roughly $1 billion -- but the firm is far from alone: Plano, Tex.-based Acqura Loan Services and Irving, Tex.-based iServe Servicing Inc. are two other examples of other newer firms that are aggressively looking to position themselves in the "high-touch" market segment, as well. And, like many of the firms now competing in the space, the firm's capital backing means it often will assume the loans it services; firms like RCS play the role of investor and servicer alike, while opening up their platform to third party investors as well. Sidenote: That RCS is largely based in Fort Worth makes sense ... the company is headed up by Dennis Stowe, who previously was president and COO at Fort Worth-based Saxon Capital, Inc. and ran the company's servicing operations until it was sold to Morgan Stanley (MS) in late 2006. Write to Paul Jackson at firstname.lastname@example.org. 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.