Weeks before Guardian Asset Management was purchased by New Residential Investment Corp, Covius Holdings, had a strategic investment made. That investment was made by no other than New Residential. And several weeks after that, Covius Holdings announced the acquisition and purchase of various businesses from Chronos Solutions including its credit, flood, income and tax verification services, REO management and disposition, online foreclosure auction and homeowners association (HOA) tracking units.
So, who is the New Residential Investment Corp (NRIC)? Its parent, Fortress Investment Group, are the controlling arm of NRIC. And pay attention here class because the ride gets bumpy: Fortress was purchased by SoftBank, a Japanese technology firm for $3.3 billion in 2017, whose owner is CEO Masayoshi Son, currently the richest man in Japan. The Wall Street Journal had this to say, about SoftBank Group, recently,
SoftBank Group is leaning on its employees, including Chief Executive Masayoshi Son, for cash as the firm rushes to raise an ambitious technology fund amid volatile markets.
The Japanese company plans to lend up to $20 billion to its employees to buy stakes in its second giant venture-capital fund, people familiar with the matter said. Mr. Son may account for as much as $15 billion of that amount, some of the people said.
It is an unusual setup that would doubly expose SoftBank to a startup economy that is starting to show cracks.
I digress. Fortress bought Nationstar in 2006 and took the company public in 2012. Then, in 2017, Nationstar was scooped up by WMIH, Washington Mutual’s former parent and a formerly bankrupt firm in a similar space. In a slight of hand trick, WMIH did a reverse stock split and re-branded itself and Nationstar under the moniker of Mr Cooper. This is important as Nationstar now controls Xome, which recently acquired Assurant – Field Asset Services.
During the same period, between 2017 and 2018, “[NRIC] agreed to pay Citigroup $950 million for servicing rights on Fannie Mae and Freddie Mac backed loans with $97 billion of outstanding balances.” We also know that NRIC bought a substantial chunk of Ocwen — literally in shares and servicing — and Altisource. HousingWire had this to say in August, 2017,
Specifically, the companies said entered in an 8-year Cooperative Brokerage Agreement, which covers the $110 billion Ocwen MSR portfolio, as well as an approximately $6 billion non-agency MSR portfolio that New Residential agreed to acquire from PHH in December 2016.
NRIC, during the same period of time, went on an additional buying frenzy and acquired and re-branded New Penn Financial. And in a final bite, NRIC ate up Ditech Financial after its and Reverse Mortgage Solutions’ bankruptcy. It is in this deal that both NRIC and Mortgage Assets were both used as “stalking horse bidders” with respect to the handling of Reverse Mortgage Solutions, the now bankrupt provider of reverse mortgage servicing for HUD.
While the above is not exhaustive, it paints a picture which I predicted nearly two years ago. In a series of articles, Foreclosurepedia predicted that the vast majority of Mortgage Field Services would be controlled by top level investment funds. In the same way that Digital Matrix Group was founded to bring foreclosed assets to investors months before Realtors ever saw inside them, so to the venture capitalists have recognized the advantages of technology.
We are looking at an 80% or so control of the Mortgage Field Services Industry by a Japanese controlled firm. Anyone not believe last year’s predictions now? Anyone having second thoughts about anti trust issues in the Industry? And is there anyone left whom believes that with these sales, the National Association of Mortgage Field Services (NAMFS) will survive, going forward?!