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March 06, 2020  

BofA's Silverstein Jumps to New Residential

Baron Silverstein is stepping down as head of mortgage-bond underwriting at Bank of America to join New Residential Investment, reuniting with former boss Michael Nierenberg.

Silverstein, a managing director, informed BofA on Feb. 28 that he would leave the bank’s New York office in two weeks. Sources characterized his job at New Residential as a supervisory role tied to the REIT’s various mortgage-securitization programs.

BofA Managing director Mark Michael is expected to take over for Silverstein.

Sources said Silverstein’s move in part reflected a desire to work with Nierenberg, who led BofA’s securitized-product group before becoming New Residential’s chief executive in 2013. The two also were colleagues in a predecessor group at Merrill Lynch, and at J.P. Morgan and Bear Stearns before that.

There also have been rumblings about recent changes in the chain of command at BofA.

For New Residential, the talk is that Silverstein’s arrival could signal a further increase in securitization volume. The New York operation and its affiliates sold $9.6 billion of bonds backed by mortgage cashflows in 2019, up from $6 billion in 2018 and $3.9 billion in 2017.

New Residential has completed three deals for $2 billion so far in 2020, one each backed by reperforming mortgages, seasoned alternative-A loans and new accounts that don’t meet the Consumer Financial Protection Bureau’s “qualified-mortgage” standards. The REIT, managed by Fortress Investment, also has issued bonds underpinned by servicer-advance payments and mortgage-servicing rights in the past.

BofA’s activities as an underwriter have been more stagnant, despite a highly active role in the market. While the bank earned $13.2 billion of league-table credit as a bookrunner of mortgage-related securitizations in 2019, up from $12.2 billion in 2018 and $11.6 billion in 2017, overall issuance volume expanded far faster over that stretch.

Industry participants attribute some of BofA’s slower growth to a risk-averse approach to the sector. For example, BofA keeps a strict limit of the amount of warehouse financing it offers to originators of nonqualified mortgages.

Silverstein and Nierenberg both played prominent roles on Bear’s high-flying securitization team prior to the bank’s financial-crisis collapse, with Silverstein co-heading the mortgage-finance division and Nierenberg working a layer above him. The two market veterans then remained on board briefly after the institution’s emergency takeover by J.P. Morgan in 2008.

They subsequently landed at Merrill, which was taken over in 2009 by BofA — where they helped to engineer a post-crisis recovery. Mark Michael, also a one-time Bear employee, joined BofA the same year from Fortress.