Stonegate Mortgage, a fast growing nonbank lender based in Indianapolis, has received a $25 million investment form private equity fund, Long Ridge Equity Partners, and plans to use the money to grow both its servicing portfolio and third-party lending channels.
In connection with the investment Stonegate is adding Long Ridge advisor Richard Mirro to its board. Mirro made his name in the mortgage industry two decades back as the CEO of North American Mortgage Corp., once one of the largest nonbank lenders in the U.S. Mirro also held senior positions at Chase Manhattan Mortgage and Fleet Mortgage.
Among other things, the company plans to buy MSRs from banks that face balance sheet and regulatory constraints. Stonegate also will use the proceeds to expand its retail branch network.
The $25 million figure was not part of the official press statement from the two firms, but sources confirmed the number to National Mortgage News.
In addition to Mirro, Long Ridge partner Kevin Bhatt and Long Ridge co-founder Jim Brown are joining Stonegate's board.
“Stonegate is the first mortgage servicer that we've invested in out of the current fund,” Bhatt told NMN, noting that the company has been looking at the space for “quite some time” in an effort to find the right partner.
Bhatt said Long Ridge likes Stonegate's senior management team and its “judicious” approach to the business, which has paid off in terms of performance and growth. Long Ridge wants the nonbank to increase its market share, taking advantage of struggle players such as Bank of America.
“We're focused on high credit quality loans, so we're not going to grow at a pace that would compromise that,” said Stonegate CEO Jim Cutillo in an interview. “I think the capital is going to allow us to grow faster but still in a very controlled way.”
The company's business is split almost evenly between Fannie Mae and GNMA. “We see strong value [in both types of loans] from a servicing perspective and would be a strong buyer of either,” said Cutillo.”
