Big Plans for Acqura
Dallas-In the mortgage business timing can be everything. Take the case of Amy Brandt, the former CEO of WMC Mortgage, once one of the nation’s largest subprime wholesalers.
Ms. Brandt left WMC in late 2006, while the company was still riding high and earning money. In 2004, General Electric had bought the lender when it appeared that subprime and nonprime were the future of residential finance.
But Ms. Brandt walked away when her contract up was up. Executives who worked with her said being owned by a large conglomerate that liked to call the shots just didn’t sit well with the WMC CEO. (She had worked her way to the top at WMC, starting out as an account executive, moving to branch manager and then EVP of production.)
Less than two years after her departure, Burbank, Calif.-based WMC is no more, yet another victim of the subprime industry’s historic collapse. GE lost roughly $1 billion on its investment in the non-depository.
Now Ms. Brandt is back as the CEO of both a hedge fund, Vantium Capital, and its newly acquired specialty servicing division, Dallas-based Acqura Loan Services.
The way Ms. Brandt sees it, Acqura - which presently services about $100 million in mortgages - is getting in on the ground floor of a booming industry: the subservicing of subprime and nonprime mortgages for hedge funds and investment bankers, the latter of which supplied massive amounts of liquidity to non-banks lenders. The result: more than $2 trillion in A- to D loans were originated during the boom years of 2002 to 2007. About one-third of these loans are now delinquent.
“Within 18 to 24 months we hope to be servicing $5 billion to $10 billion in loans,” Ms. Brandt said in an interview with Mortgage Servicing News.
Her growth estimates sound aggressive, but then again her ultimate boss is famed investment banker Leon Black, the former Drexel Burnham Lambert executive who once worked under junk bond king Michael Milken. Mr. Black’s Apollo Management LP is backing Vantium.
Like Ms. Brandt, Mr. Black has pretty good timing himself. He was the one who sold WMC to GE back in 2004 for a reported $500 million. (Prior to the sale, Ms. Brandt had been credited with turning around WMC, which struggled earlier in the decade.)
Now that subprime has crashed Mr. Black, in the form of Vantium and Acqura, is here to profit from the cleanup. (One of Vantium’s senior managers is former Deutsche Bank loan trader Michael Commaroto. Former Option One Mortgage executive David Vida, who sold Acqura to Vantium, remains with the servicer as its president. Acqura is just one year old.)
Ms. Brandt has no intention of competing against what she calls “big box” servicers whose forte tends to be prime. Roughly, 40% of Acqura’s $100 million portfolio is in some stage of delinquency with the balance deemed performing or “subperforming.”
Acqura does not own any of the servicing rights on its portfolio. It functions strictly as an outsourcer, a subservicer handling the messy business of cleaning up delinquent residential loans. It receives fee income from its clients, the hedge funds and investment banking firms whose identities she declined to provide. “They’re very discrete,” she said of her client base.
The mortgages the company subservices are what she calls “high-risk loans.” These products include not only subprime, but alt-A, payment-option ARMs and HELOCs. (Acqura has a sister company, Strategic Recovery Group, whose forte is collecting on charge-offs, including HELOCs.)
On average, Acqura has one employee per 150 or so loans, compared to 800 for the bigger firms like Wells Fargo and Bank of America. Its loan collectors work in “pod” teams of five or six workers. “We’re more hands on,” said Ms. Brandt.
As for future growth, she does not see Vantium growing Acqura through acquisitions of other firms. “We’ll look,” she said, “but our strategy is to grow de novo and leverage what we have.”