A New York City-based real estate investment joint venture, with high-powered Wall Street backing, has bought Depew-based mortgage servicer AMS Servicing LLC.
This ensures that fast-growing AMS will have access to a pool of additional capital that can position it to grow as a buyer of mortgage servicing rights across the country.
Arbor Commercial Mortgage LLC sold AMS to Seneca Mortgage Investments LP, which is a joint venture of Arbor, GSO Capital Partners LP and EJF Capital LLC. Seneca Mortgage, as well as AMS, will be managed by Seneca Mortgage Management LLC, with offices in both New York City and Depew.
Arbor Commercial Mortgage, its former sole parent, is a national direct lender that specializes in originating and servicing multifamily and other commercial real estate loans. It currently services $10.8 billion in loans, and is a top lender under Fannie Mae, Federal Housing Administration and Department of Housing and Urban Development low-income housing tax credit programs.
GSO is the debt-focused investment management arm of Wall Street private equity giant Blackstone Group. With $63 billion in assets under management, it’s a big participant in leveraged finance.
Founded in September 2005, EJF is an independent SEC-registered investment adviser, owned by its employees, that manages alternative investment strategies for qualified individuals, institutions, foundations and endowments.
The deal had been announced Sept. 12 but needed regulatory approval before closing. Terms were not disclosed.
However, the partners didn’t waste time waiting since the announcement. Seneca Mortgage over the last 90 days provided equity financing for AMS to buy the rights to service mortgages with a total unpaid balance of $9.7 billion.
That purchase, which will close by early March, will roughly double the number of mortgages that AMS services from 18,000 to at least 35,000 and as many as 40,000.
“We are extremely pleased to be joining two very successful partners whose expertise and capital strength will help us collectively execute our core business strategy,” Ivan Kaufman, Chairman and CEO of Arbor Commercial Mortgage, said in a news release. “Going forward, this new partnership will certainly maximize our ability to capitalize on the many opportunities we see in the residential mortgage-servicing marketplace and will greatly enhance and diversify the AMS Servicing platform.”
Founded in 2008 and led by President James DePalma and Executive Vice President Craig Lindauer, AMS specializes in providing both prime and “special” servicing for healthy and distressed loans, respectively. It handles residential and small-dollar commercial mortgages nationwide for clients that include some of the biggest banks and investment funds in the country.
The closing of the deal is the latest sign of rapid growth for 6-year-old AMS, which received approval from the Erie County Industrial Development Agency late last month for $219,000 in sales tax breaks to help it move from Depew to a much larger facility in Elma. It also received $1.5 million in state tax credits.
The $2.5 million project calls for AMS to lease 35,000 square feet of space in the former Motorola plant – which is more than twice the size of its current facility at 3374 Walden Ave. – with an option to lease an additional 30,000 square feet if needed later.
The company currently employs 270, and could add 195 jobs with the move. Even before this, the company was growing its employee base, offering jobs over the summer to 35 former JPMorgan Chase workers from that bank’s former call center in Albion. It still had 75 other job openings at the time.
AMS is licensed in all 50 states, and is already approved by Fannie Mae and Freddie Mac to hold, service and manage mortgage-servicing rights. It’s seeking the same approval from Ginnie Mae, the Government National Mortgage Association.
“We are very excited to close on this new business venture,” Darren Richman, senior managing director of GSO Capital Partners LP, said in the release. “The evolution of the residential mortgage-servicing marketplace, along with the strength of this partnership, presents an excellent opportunity for the Seneca Mortgage Companies, as a well-capitalized, non-bank, non-originator, to differentiate itself in the industry as a purchaser of mortgage servicing rights, as evidenced by the significant growth we have seen in a short period of time.”