Investment Group Peer Advisors announced plans to acquire 100% of the stock tied to reverse mortgage subservicer Celink.
The transaction could suggest Peer Advisors is responding to demand for new entrants, or increased capacity, in the subservicing space, investment experts say.
The deal itself, which is for an undisclosed amount, is part of Peer Advisors' stated plan to invest in the growing senior housing finance space.
Peer Advisors is lead by Jim Mahoney, Jason McNamara and Al Benedetti.
Mahoney will serve as chairman of Celink once the transaction is finalized, while McNamara will lead the firm as CEO. Celink’s founder and CEO John LaRose is remaining onboard as a consultant, while Ryan LaRose will serve as Celink president and COO.
Benedetti is stepping into the role of executive finance director.
Peer Advisors’ move is not unusual. The servicing space is still in shake-up mode, with firms coupling up and investment firms looking for mortgage servicing rights or platforms with potential value.
David Fleig, president and CEO of investment advisory firm Steadfast Capital, has been tracking the growing interest in mortgage servicing rights for months now.
While he has no personal experience with the Peer Advisors acquisition, he says, many investors have an interest in exposing themselves to MSR assets in one form or another.
But when it comes to the subservicing space that Celink is in, that’s a different beast altogether.
“I think there is a lot of interest in the MSR asset,” Fleig said. “In terms of subservicing, it is a very low margin business.”
But despite the subservicing business being low margin, firms may be responding to a need for new entrants in the arena.
Fleig is not sure what motivates a firm to acquire a subservicer. But he added, “Our sense is many of these subservicers are at or above maximum effective capacity utilization. They brought on so much new business so quickly, their systems and staff may be having a hard time keeping up right now.”
When companies move into this space, they could be responding to the need for more capacity, he suggested.
“It is a low margin business, so you would tend to think if there are new entrants, there is probably more going on underneath the hood," Fleig suggested. "Maybe they want a platform for another reason." Right now, the motivation is not entirely clear beyond Peer Advisors' stated goals.
Mahoney, who will serve as Celink’s chairman, described the nature of the deal in a public statement.
"We believe the Celink platform, coupled with the human and financial capital of Peer Advisors, will position the company to continue meeting the needs of its client base and new borrowers as it builds its product offerings," he said.
His statement conveyed a definite interest in claiming a stake in the reverse mortgage business.
“We look forward to working with the Celink team to build on the excellent foundation laid by John and Ryan as we seek to play a pivotal role in the growing reverse mortgage industry,” Mahoney added.
