Altisource Asset Management restored the trading of its shares on the New York Stock Exchange Monday after unveiling plans to finance alternative mortgages and invest in cryptocurrency-enabled ATMs.
The company was originally spun off from industry services provider Altisource SA to specialize in services for direct real-estate investment vehicles, including those dedicated to distressed and single-family rental loans. However, Altisource Asset Management terminated ties to its main client, Front Yard Residential, when FYR was purchased in late 2020. The NYSE delisted Altisource Asset Management due to its lack of operations in December, when it became an internally managed real estate investment trust.
The company’s relaunch initially boosted its shares, but at deadline Monday they had subsequently reversed course, plateaued and drifted lower. That may be because investors are waiting to see more tangible results from Altisource Asset Management’s change in strategy as it enters the market for outside-the-box mortgages. These loans have gained more traction recently because they can generate countercyclical growth when rates rise for companies able to adequately manage mortgage credit risk. Altisource Asset Management’s historical expertise managing credit-sensitive assets and servicing could make it a contender in that regard. (AAM’s former parent company, Altisource SA, was itself a spinoff of mortgage servicing firm Ocwen.)
“We've created an alternative lending group with an initial equity capital commitment of up to $40 million,” said Thomas McCarthy, interim chief executive officer, in an investor call Monday morning.
At the time of the investor call, the company had trade confirmations for $22 million in bridge loans and had enough lines of credit to purchase over $100 million in originations, McCarthy said. It plans to begin originating later this year either by acquiring an existing team or through the organic creation of a new unit within the next two to three months. Existing operations the St.Croix-based company has in India will support the group, and the company plans to originate more than $50 million per month once it’s established.
Jason Kopcak, who previously was an executive director of the residential mortgage team within Morgan Stanley’s global capital markets unit, will lead the new group as president and chief operating officer. Kopcak also previously led a group at Nomura that worked to create an institutional market for non-traditional mortgage products like single-family rental and non-qualified mortgages that banks wouldn’t buy. He is slated to join Altisource Asset Management in May.
In addition to “gig economy” mortgages made to self-employed and business-owner borrowers that don’t meet the criteria set by government-related entities, Altisource Asset Management will buy or originate loans from construction, investor, transitional and special-purpose credit programs. Transitional financing may be secured by mixed-used, single- or multifamily properties.
Altisource Asset Management also has the right to first refusal on the deployment of new crypto-enabled ATMs with technology company ForumPay. ForumPay has been working with Altisource SA on a crypto payment option. AAM sees growth potential in the niche as only 36,000 of the world’s 3 million ATMs have been crypto-enabled. More than 295 crypto investors exist, according to the company. The company has allotted an initial $2 million in capital to this opportunity.
