Due diligence firm American Mortgage Consultants has acquired the right to hire 50 employees from The Barrent Group and will add 150 more in response to increased private-label securitization.
The Des Moines, Iowa-area employees hired represent substantially all of TBG's staff, American Mortgage Consultants CEO Michael Franco said in an interview. Some of the group's technology also is being acquired in the deal, and TBG President Richard Barrent will join American Mortgage Consultants as a director as part of the acquisition. Financial terms of the deal were not disclosed.
American Mortgage Consultants is staffing up because while mainstream originations are lower year-to-year, the volumes of less-traditional products that tend to be sold into private-rated and unrated securitizations are growing.
"We're anticipating further growth in non-QM, single-family rental and even jumbo securitization categories. If you take a look at the rated securitizations on a year-over-year basis there's been some pretty significant increases in those areas," he said. "We're still significantly below peak issuance volume but we're seeing more than we have in the past few years."
At the same time, the percentage of residential mortgage-backed securities loans undergoing third-party reviews has been below 100% with more frequency for the first time post-crisis recently, according to a Moody's report.
"It hasn't been that significant but this is potentially signaling a trend," Yehudah Forster, senior vice president at Moody's, said in an interview about his recent report on the topic.
Franco and Forster declined to comment on whether the report had implications for the overall level of demand for third-party reviewers. The trend could have implications for credit, according to Moody's. Where representations and warranties are weak, reviewing only a sample of loans from a pool could expose securitization investors to possible credit concerns. But some partially reviewed pools to date have had offsetting credit considerations such as mortgage collateral from originators with strong track records, said Forster.