Monday, September 29, 2008

New Servicer Targets Needs of Distressed Mortgage Investors By: PAUL JACKSON September 29, 2008

(Housing Wire) Add another firm to a growing number of special servicers targeting the so-called “high-touch” segment created by distressed asset investors looking to aggressively modify acquired loans. Dallas-based Wingspan Portfolio Advisors, LLC, announced on Monday that it had opened its doors for business, and that it would announce its first major client relationship next month.

“High-touch” special servicing has become an in-demand item for investors looking to recoup their investment on sub- and non-performing loans, and a fair number of special servicing firms have publicly announced their intentions to pursue this market in recent months. One such firm, for example, is Dallas-based Aqcura Loan Services, which began targeting the specific needs of lenders, hedge funds and investors in distressed debt back in April. Even giant servicing operation Residental Capital LLC signaled in August its desire to build up a third-party special servicing business targeting distressed asset investors.

But for all of the interest investors now having in third-party servicing arrangements, the space remains relatively wide open, according to various fund managers that have spoken with HW.

Wingspan is led by Steven Horne, a lawyer and servicing industry veteran who perviously was a director of Servicing Risk Strategy with Fannie Mae (FNM: 1.56 -14.75%). He also spent nine years as a partner with Sherman Financial Group, as well as serving as a director of default servicing for Ocwen Financial Corp. (OCN: 7.91 -1.37%). Wingspan’s senior management team includes industry veterans with decades of proven default servicing success at many leading companies.

“There are very few specialists out there with the tools and skills needed to cure these nonperforming mortgages, and so many times these loans, and especially the ones with low equity or low balances, are given up on,” said Horne.

Horne suggested that traditional servicing methods rely on net present value (NPV) to arrive at decisions, and said that doing so creates an assumption that loans outside the loss mitigation model can never be saved.

“We don’t arrive at the decision that a loan is lost before we completely understand the situation,” he said. “That means using advanced analytics that consider each factor affecting the loan and exploring every servicing strategy open to us.”

Horne said that the company is structured to focus on loss mitigation: 50 percent or more of the income earned by loss mitigation specialists at the company is tied directly to bringing loans back from the brink of foreclosure to paying status.

“Once they’ve accomplished that, we switch the case over to other specialists whose jobs entail keeping the payments flowing until the loan is contractually current,” Horne notes.

“We even monitor call times to make certain a sufficient amount of time is spent with each borrower. That’s another departure from traditional servicing methods, but our borrowers need that extra attention if they are going to have a chance to succeed at bringing their mortgage current.”

For more information, visit http://www.wingspanadvisors.com.

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