08/17/2012

25 Capital Vehicle Targets Nonperformers

An investment shop headed by a former Bank of America securitization banker is marketing a vehicle that would buy nonperforming home loans, with an eye toward securitizing down the road.

Charlotte-based 25 Capital aims to raise up to $200 million for its 25 Capital Mortgage Opportunities Fund, which would seek a 15-20% annual return. An early backer evidently has agreed to commit 25% of the overall capital.

The planned fund would be the first commingled vehicle offered by 25 Capital, the asset-management arm of mortgage-servicing firm RoundPoint Financial of Charlotte. Its assets currently total $1.1 billion, including separate accounts and two portfolios of home loans it manages for the FDIC under a “structured sale” transaction.

The head of 25 Capital is Shaun Ahmad, who focused on subprime-mortgage securitizations while at BofA. He left the bank in 2008 to help start RoundPoint, then set up the asset-management unit last year. Word has it he intends to spin off 25 Capital as a separate entity as soon as next month.

Ahmad picked an opportune time to expand 25 Capital’s purchases of nonperforming loans. After sitting on the sidelines for several months, big banks including Ally Financial, BofA, Citigroup, J.P. Morgan and Wells Fargo have resumed efforts to rid their books of distressed mortgages. Last week, for example, Citi was shopping a $622 million nonperforming-loan portfolio, while Wells was in the market with a $135 million offering.

An increasing number of buyside shops are targeting nonperformers, often funding their purchases via securitization. Among the recent issuers of bonds backed by nonperforming mortgages are Pacifica Mortgage of San Diego and Vericrest Financial of Oklahoma City. 25 Capital declined to comment.

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