Kondaur Capital Corp., an active player in the nonperforming loan market, Monday slashed its staff by 39%, saying it is having a hard time finding enough available product to purchase.
Company chairman Jon Daurio said that prior to the layoff of 155 workers, the privately held firm had negative cash flow, but after the cuts it will be cash flow positive.
At press time the Orange, Calif.-based Kondaur was in the process of giving notice to the workers. Their last day will be April 18.
Daurio said he believes accounting rules allow banks to warehouse NPLs without having to mark these problem assets to market at their true value.
Asked whether Kondaur was having a hard time buying NPLs at a price it likes, he said it is more a matter of banks "not even putting these assets out for bid."
The company has roughly 3,000 loans on its books, which the firm said is a recent "low point for us."
Daurio added that he believes many banks are under reserving on their NPL assets. "You have to pay the piper some time," he said.
The executive said that despite the layoffs, the company is still growing in other areas, citing its recent launch of DKR Collateral Dynamics, which offers due diligence reviews to loan investors.