Expanding its capabilities in the default management/real estate owned segment, Stewart Lender Services, a subsidiary of Stewart Title Co., Houston, has purchased the majority ownership interest in PMH Financial, Denver, from Braddock Holdings Co. Terms of the deal were not disclosed.
It was PMH's reputation as well as the reputation of its president and CEO Ken Blevins in the REO market that attracted Stewart as it decided it wanted to make an acquisition in this area, explained Stewart Lender Services president and chief executive Jason Nadeau. It also helped that PMH had not been owned by a competitor of Stewart, he added.
Another motivation is that this is one of the few growing sectors of the business, and it will have "healthy revenue streams for many years to come, unfortunately given the nature of what we are seeing in the market," Nadeau said. Blevins added when the crisis first hit back in 2007-2008, if you asked him back then, he believed the business would have run through all of the foreclosed properties four-to-five years from then.
However because many of the troubled properties have yet to hit the market, it has created a "long tail" for the REO disposition process, Blevins said. "We are in the infancy stages of the business to come over the next four or five years.
PMH's management is retaining its minority share of the company's ownership.
Stewart Asset Recovery Group has been in the REO service space for the past 18 months. PMH's business also includes short sales management, collateral valuation, subservicing, loan review and due diligence services to national and regional lenders.
Blevins noted Stewart has been very successful in the short sales and loss mitigation area, an area PMH wants to grow in. The two operate at different ends of the short sales business. PMH's platform is "driven bottom up, where we work homeowners and real estate agents to get their short sales approved."
On the other hand, Stewart works top down, where they get their leads directly from their clients, he said.
Stewart also gives PMH a stronger financial footing to compete against larger firms, as it has a much larger balance sheet than Braddock.
