Foreclosurepedia exclusively broke the story, the other day, on the pending sale of DGG RE Investments LLC d/b/a Guardian Asset Management to New Residential Investment Corp (NRIC). Guardian provides both pre and post conveyance services, to the Mortgage Field Services Industry, on behalf of financial institutions and the US government. Many on the outside, looking in, are preaching a gospel that this is no more glamorous than a repeat of the sale of Asset Management Specialists (AMS) to Mortgage Contracting Services (MCS). There are similarities, to be fair. The Team which ran AMS, for years, and including its owner, came over to Guardian and set up shop in the very location where AMS used to operate out of in Levittown, PA. And at the time of sale, AMS was loaded heavily with US Department of Housing and Urban Development (HUD) Management and Marketing (M&M) Field Service Manager (FSM) contracts just as Guardian is now. Does that paint a fair picture, though? I am not sure. A lot would hinge upon whether or not HUD allows the transfer of the HUD M&M FSM contracts to New Residential. Just as MCS sought to obtain from the former AMS and HUD did not allow such, so to it very well may be an identical canvas. We know that 100 percent of all shares, held by the Guardian leadership, will be purchased by NRIC. What we also know, is that according to senior sources, directly knowledgeable with the deal, stated, “[…] the Guardian leadership will remain in place.”
So, who is the New Residential Investment Corp (NRIC)? Its parent, Fortress Investment Group, is 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 and buying frenzy gobbled up a huge chunk of CitiMortgage in a deal between 2017 and 2018. In late 2018 and early 2019, NRIC also acquired and re-branded New Penn Financial. And in a final bite, NRIC ate up Ditech. 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 (RMS), the now bankrupt provider of reverse mortgage servicing for HUD.
As we will get into in our upcoming articles and podcasts, the SoftBank that you think you know is not the real SoftBank. With deep ties to Communist China and the Crown Prince of Saudi Arabia, Masayoshi Son, owner of SoftBank is making good on his Cluster of No. 1s strategy — the idea of taking non-controlling stakes in industry-leading companies and encouraging them to cooperate.
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.
How will this bode for the one arm of the Industry necessary to work, Labor? Well, no one is sure. While senior officials at Guardian promise a business as usual footing, the reality is they no longer have any say or control.