Last summer rumors were spreading that a private equity firm had amassed $1 billion in cash and was eyeing investments in mortgage banking firms. A year later it appears that no such deals were struck by the unnamed fund, but that hasn’t stopped the talk about PE firms still looking at the sector.
“The PE firms are still out there,” one Texas-based investment banker told ASR sister publication National Mortgage News. “I get calls from them every week. They put us on retainer and we talk.”
The investment banker, like many interviewed for this article, did not want to be quoted by name and would not name the firms he’s talking to, citing client confidentiality.
“These are household PE names,” he stressed. “They tell me how much money they have to spend and we go from there.”
The official said one PE firm he’s working with recently completed a purchase of a mortgage company (which will be announced shortly) and is working on two others.
Private equity investors are also eyeing the mortgage servicing arena—as investors in MSRs.
One West Coast PE executive said his fund sees the returns some REITs are enjoying by investing in MSRs and wants to replicate that performance. “These are high unlevered returns,” he said. He too declined to comment on the record.