Workout Firm Does Construction Loans

Vadium Group here is a new firm founded by mortgage industry veteran Joel Pate that dares to go where many fear to tread: single-family construction loans gone bad.

But Mr. Pate and his team bring more than curiosity to the single-family construction asset management and loss mitigation world. The company's leaders have a background in doing construction loans, having worked on more than 10,000 such loans. Mr. Pate personally oversaw the construction and sale of more than 500 homes earlier in his career with homebuilder Miranda Development. He has also been involved in over $100 million of construction loans and over $1.3 billion of residential lending.

The company, which had just nailed down its first client as MSN went to press, has modest goals. Mr. Pate said he'd like the firm to manage about 1,000 transactions within the next year.

"Every different loan has its own story," he said. "We think the intellectual capacity and experience that we put together is not scaleable."

Vadium can help clients, such as banks that hold nonperforming or stalled construction-to-borrower and construction-to-permanent loans. Many involve second-home or investor-owned property.

Vadium can help clients analyze the property to assess whether or not it should be sold as is or construction completed.

"Can I lose less money if I finish the house, or will I lose less money if I sell it as is?" is the question Vadium addresses for clients, Mr. Pate explained.

In addition to assessing the options, Vadium can manage the process of completing construction and maintaining the property if a client chooses to go that route.

Vadium plans to focus on key markets that have seen a lot of residential construction lending, including Florida, Georgia, Nevada and Texas.

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