Angelo Gordon doubles down on loans with Selene team

by Al Yoon

Angelo, Gordon & Co. has engaged a team of residential loan managers from the distressed loan unit of Ranieri Partners as part of an expansion of its mortgage credit business, according to three investors and a bond issuer.

The Selene Investment Partners group is led by Dave Reedy, a senior vice president with Selene who has become a sage of the whole loan market since working at Salomon Brothers and then Citigroup, where he worked for 16 years before leaving in 2008, said the sources and his bio on a Ranieri website.

Other members of Reedy’s team include Glenn McIntyre and trader Michael Zai, according to the website.

The group is still employed by Ranieri’s Selene, which remains active in the space, the issuer said. The sources, however, said the details of the arrangement between Angelo, Gordon and Reedy’s team aren’t clear.

The partnership is just the latest high-profile play for Angelo, Gordon, one of the most active managers of NPLs and RPLs since the financial crisis. In 2012, it hired Jason Biegel away from Lone Star Funds. It has since become the third-largest buyer of NPLs from the US Department of Housing and Urban Development, with more than USD 1bn in UPB purchased, according to an October 2016 HUD report.

The arrangement shows that the New York investment manager is bullish on opportunities in both non- and re-performing loans, whose hundreds of billions of dollars in estimated supply has become a primary focus for mortgage investors this year, one investor said.

For example, AG Mortgage Investment Trust was recently approached by a broker-dealer offering first-loss pieces of a securitization of re-performing mortgages purchased from a money center bank, according to TJ Durkin, a portfolio manager for the Angelo, Gordon-managed REIT, who made the statement on the firm’s 4Q16 earnings conference call on Wednesday. AG Mortgage participated in the deal, which should be “repeatable” in 2017, he said.

Reedy’s specialty has been working with residential mortgage products including prime, subprime, sub-performing, non-performing, re-performing and HUD loans, according to his bio on the Ranieri Partners Management website.

By tapping Reedy’s experience, Angelo, Gordon is showing it is “committed to the space and sees more opportunities going forward,” the investor said on the sidelines of the SFIG Vegas 2017 securitization industry conference on Tuesday.

Jonathan Lieberman, co-head of a newly formed structured credit platform at Angelo, Gordon did not return calls. The platform includes the manager’s consumer loan and residential and commercial debt businesses, according to a 14 February regulatory filing announcing Lieberman’s new role and that he had stepped down as CIO of the AG Mortgage REIT. An Angelo, Gordon spokesperson declined to comment.

A call to Reedy’s Ranieri office was not returned. One investor said Reedy was likely at the Las Vegas conference.

Conference focus on whole loans

Whole loans were on the lips of many investors and bankers at the ABS conference, which drew record registration of more than 6,500 people. With yield spread premiums on RMBS and credit-risk transfer debt at their tightest in years, performing whole loans have become the best value in mortgage credit — as measured by responses to one conference panel poll on Monday.

Marc Simpson, an executive director with a role in JPMorgan residential securitizations who was on the panel, said the whole loan market is getting “a lot of attention,” with many investors pivoting there and to CRT from legacy RMBS.

Investors in the market have often said tailwinds of rising home prices and low unemployment justify their bullish views. But they face risks if the servicing needed to fix the loans costs more than expected or if modifications fail.

Investors are looking to Fannie Mae and Freddie Mac as some of the most reliable sources of supply this year. The GSEs had USD 289bn on their books as of late 2016, Wells Fargo Securities said in an 18 November report.

Most of the GSE supply are re-performing loans, which Fannie Mae began selling in October with a USD 789m pool, as reported. Fannie plans four sales this year in sizes exceeding its pilot auction, said Bob Ives, vice president of retained portfolio asset management.

Ives said there was strong demand for the loans, most notably by hedge funds and insurance companies.

Cerberus Capital Management has been among the most aggressive bidders, as reported (see article, 9 November). Wall Street dealers have also inflated bids, said one RPL investor.

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