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“Faith is taking the first step even when you don’t see the whole staircase.”
– Martin Luther King Jr.
Since I have been in the loan modification business my source of hope for a better American economy has come from the people. The struggling American families who, burdened with toxic mortgages, decide to fight the good fight on a daily basis. Up until now my faith in a brighter economic future stemmed from the actions of these individuals that get up every day and decide to continue to fight their lenders and servicers. Like Martin Luther King Jr., their faith is manifest in the decisions they make on a daily basis…whereas they do not see, with absolute clarity, how their problems will be solved, they continue to take steps towards solutions every day.
Today is an important day for me as I have a new source of faith in an improved American economy. This new source of faith is Wilbur Ross, owner of a private equity firm in New York. Mr. Ross is proactively improving the servicing of vast mortgage pools and is buying up larger tracts of notes on a grand scale. We will be following Mr. Ross and his management of mortgage servicing closely. This post, then, is an overview of Mr. Ross and what he is doing to improve the American economy from the top down.
| “American Home Mortgage…is already the second-largest mortgage servicer for third parties in the country, and this adds to our scale,” Ross told CNBC in an exclusive interview. “There’s tremendous operating leverage as you put more activity through the same systems.” |
Wilbur Ross who owns the New York private equity firm WL Ross and Co., LLC who also purchased bankrupt American Home Mortgage Servicing, Inc. (AHMSI) this past year has purchased the exclusive mortgage servicing rights from Citi Mortgage.
The massive mortgage buy is said to total approximately $1.5 billion dollars to cover 185,000 home loans.
I have been watching WL Ross and AHMSI since they gobbled up H&R Blocks’ Option One this past year and what I can say is that this guy is the real deal. Mr. Ross knows exactly how to operate a proficient and “effective” specialty mortgage servicing operation for homeowners that are in default.
My firm was dealing with the infamous subprime Option One prior to the WL Ross purchase and their service went from terrible to fairly efficient within about 60 days of AHMSI taking over. There is still much room for improvement, but it seems like Ross is dedicated to helping more homeowners stay in their homes and he wants to stand out from the rest of the mortgage servicing crowd.
LoanSafe is seeing better loan modifications and faster turn times for struggling homeowners from AHMSI. So, this may be very good news for struggling Citi borrowers who may see better help and faster service with AHMSI.
American Home Mortgage Servicing Inc. specializes in servicing “Alt-A” and subprime loans and the Citi deal is said to increase the number of loans in its serving portfolio by 45 percent to 575,000.
As of Dec. 31, AMHSI managed loan portfolio of more than $85 billion. The Citi deal will bring the total to approximately to $2.4 billion in servicing rights.
| The AP: “We believe our company has been doing a very good job of modifications of loans to avoid foreclosure,” said Wilbur Ross in an interview with The Associated Press. Ross runs the New York private equity firm WL Ross and Co. LLC, which controls the funds that own American Home Mortgage Servicing. W.L. Ross on CNBC: |
He explained why improving the condition of residential real estate is crucial to economic recovery.
“American families–12 million of them–are underwater on the mortgages on their homes,” he said. “The total amount of money that’s been lost by families out of their net worth due to home depreciation is probably $5 trillion. To me, (those figures) help explain why consumers aren’t buying cars, why they aren’t buying new clothes, why they aren’t taking big trips, why they aren’t eating out.”
He said the huge number of defaults now occurring has made it much more difficult to service the loans. His mortgage interests modified nearly 15 percent of their loans last year, cutting the payments to make them easier for cash-strapped customers to meet.
Ross founded American Home Mortgage Servicing in April 2008. The company is doing a lot of its work through a location in Pune, India, acquired as part of a transaction with H&R Block.
“It’s a lot more efficient to have call-center type operations and some of the back-office functions there, rather than in the United States,” he said.
