Servicer Offers a Deal to Banks Clinging to Assets

American Banker (06/23/08) P. 9; Berry, Kate
Fort Worth-based Residential Credit Solutions Inc. is a startup devoted to purchasing and servicing distressed mortgages, but its president, Dennis Stowe, says banks and lenders are hesitant to unload their assets as they weigh whether it is better to sell nonperforming assets at substantial discounts or hang onto them despite the likelihood of additional price declines. According to Randy Appleyard, Residential Credit's head of asset sourcing, "We can move the assets off their books and make it a sale, because we bring two things—capacity and capital. Or if a bank wants to take those assets to market, we can bid for them." The company underscores the importance of loss mitigation and indicates that suitable strategies do not involve keeping assets and letting them further deteriorate. The firm could handle up to $6 billion in loans and services $1 billion currently, and Stowe points out that its loss mitigators handle only 125 cases each—far fewer than the 500 to 1,000 cases taken on by loss mitigators at many third-party servicing firms.