So, what kind of 'rich folk' would commit money to a private equity fund to buy into the mortgage industry? The type of investment I'm talking about involves purchasing an existing nonbank residential lender ('A' paper only) or a top flight loan brokerage firm. (Yes, there's still some of those left.) One hedge fund officer told me: "I have two types of conversations, one where I get the phone hung up in my face and another where the guy says, 'Tell me more.'" This manager, who did not want his name publicized -- at least not yet -- said some of the investors are former mortgage bankers and even mortgage backed securities traders. He is working on a deal and hopes to have an announcement within the next two months...
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