Dressed For Distress

*Dressed For Distress*
**By James Comtois**

JamesC***It is definitely a good time to be servicing distressed residential mortgages these days. (It’s actually also a good time to be servicing and investing in distressed properties of all types these days, but that’s another story for another day.)

****Just ask Fay Servicing. Thanks to its specialty of managing distressed and at-risk resi mortgages, the Chicago-based special servicer is in quite a good place. Oh, it’s also doing well thanks to its staffing model, to be sure. But it sure hasn’t hurt that its business model focuses on a business that currently is booming.

****In the wake of dramatic growth in 2012 and in the first quarter of 2013, Fay Servicing, whose customers include banking institutions and alternative real estate investors, announced a hiring initiative in May that was implemented to entice college-educated mortgage professionals with origination experience to join the firm’s team in Chicago.

****The five-year-old servicing firm has opened its second office, a 10,000-square-foot space in Oakbrook Terrace, Ill. It’s also initiated plans to double the number of its employees from 100 to 200 by year’s end.

****So how has the hiring initiative been going since it was initially announced?

****Ed Fay, founder and CEO of Fay Servicing, told me that, as of June, the firm’s expansion plans were right on schedule. Since the release was sent last month, the firm has added 20 people to its staff so far, and he expects to have at least 20 more people by next quarter.

****“The execution has been very good so far,” Fay said, noting that the firm, which deals exclusively with whole loans, could grow even faster, but that would prevent it from properly training its new staff.

****Fay also pointed out that his firm’s staffing model is somewhat different from other servicing companies in that it focuses on attracting mortgage professionals with loan origination expertise, typically from large lenders located within the Chicago area. In other words, the firm is interested in hiring people who used to be on the sales side of the business.

****“They can empathize with customers,” he added. “Customers aren’t looking for handouts; they’re looking for a hand.” Well said.

****And why has the firm been doing so well? It’s not just its hiring model that’s enabled the company to see considerable growth over the past several months. It’s also helped that the distressed space is growing in popularity among banks, REITs, private investors and insurance companies.

****As we all know, the spectrum of distressed products are constantly expanding—whereas only a few years ago ‘distress’ used to simply mean loans that were nonperforming, it can now run the gamut of nonperforming, nonprime and even performing, but with something odd about the loan (in fact, a good portion of the loans that come to Fay’s attention are performing, but are considered distressed simply because there’s something concerning about them). And this plays right to Fay Servicing’s niche.

****So with the demand for servicing distressed loans still on the rise, it appears as though that Fay Servicing is continuing—and will continue—to see favorable growth. In fact, by the end of the first quarter of 2014, Fay plans on growing the staff to 210 professionals.

****“When it comes to distress management, you need to have the best people for the job,” Fay added.

****ABOUT THIS NEW COLUMN: James Comtois has been a financial journalist for more than 14 years and has covered the real estate and mortgage industries for more than eight of those years. He has written for such publications as Crain’s New York Business, MarketWatch, Private Equity Real Estate News and National Mortgage News. He lives in Brooklyn, NY. In this new monthly column for PROGRESS in Lending he’ll share his take on the industry with you.