(Nov. 4, 2021) SitusAMC is poised to support the explosive growth in both origination and secondary market due-diligence in the residential real estate business with the hiring of 1,500 employees over the last two quarters. “SitusAMC has invested heavily in recruiting top industry personnel, further enhancing our industry-leading training, and building out additional origination and due-diligence teams to meet surging demand,” said SitusAMC CEO Michael Franco.
Many of these new employees will boost supported rating-agency level, new-origination due-diligence reviews through the firm’s third-party reviewer, or TPR, services. These include private-label securitization, portfolio purchases, and third-party originated (TPO) channels. The firm will have capacity to review 30,000 units per month in the fourth quarter of 2021. There are plans to further expand during 2022.
“We are also refining workflows to decrease turn-times for both initial reviews and exception clearing,” Franco added. “Review teams are available on a dedicated basis to help our clients meet their business needs while also providing industry-leading service to their sellers or internal stakeholders. We look to forming a partnership with our clients.”
Production Boom Creates Backlog
An industry shortage in due-diligence capacity follows a boom in mortgage production. A record $4.3 trillion in mortgages was originated in 2020, including $1.5 trillion in purchase loans – the biggest volume since 2005, and $2.8 trillion in refinances, an all-time high, according to Black Knight. Loan production volumes for 2021 are expected to remain elevated at close to $3.9 trillion, Freddie Mac estimates. Capacity constraints were also temporarily affected by a decision last March by Fannie Mae and Freddie Mac cap the acquisition of loans secured by investment properties and second homes to 7 percent of its total single-family acquisitions. Those caps were removed in September.
The increase in secondary market securitization transactions has created a due-diligence backlog which has slowed capital markets activity for much of 2021 to date. Billions of dollars in private-label mortgage portfolios heading for securitization are awaiting review, with months-long wait times in some cases. Meanwhile, some due-diligence review firms lost personnel in 2020 and have faced continued staffing pressure in 2021 as high overall volumes have drawn employees to agency originators, who were eager for talent.
SitusAMC’s increased capacity further cements the company’s status as the leading TPR firm supporting private label securitization. This capacity is in addition to SitusAMC’s already industry-leading presence in the seasoned loan sector (i.e., mortgages that are more than two years old, including performing, reperforming, and non-performing loans). While SitusAMC tightened its focus during the pandemic when non-agency lending froze to support active clients, the firm has ramped up its capacity throughout 2021.
“Our increased capacity is now poised to enable a broader pool of market participants to leverage SitusAMC solutions and review mortgage portfolios for rated securitization transactions or for acquisition of loans into their investment portfolios,” said Tom Britt, Executive Managing Director and Head of Residential Real Estate.
Additional capacity is also being added for “transactional” assignments, allowing clients to “flex up” capacity needs, providing them the ability to execute on short-duration assignments. “SitusAMC has had great success in recruiting talent because of our employee-centric culture which features remote work, flexible working arrangements, and competitive pay and benefits,” Britt added.
To learn more about SitusAMC’s due diligence capabilities for secondary market transactions, please contact Tom Britt at (212) 247-5782.