Distressed Capital Management, LLC (“DCM”) was established June 2012 and is located in Irvine CA. DCM is an asset manager focused on the valuation, acquisition, and liquidation – via REO sale or whole loan sale – of residential non-performing loans (NPLs). Investor returns are normally derived by purchasing NPLs at a discount, converting to REO and liquidating at a profit net of costs. If desirable leverage is utilized. DCM typically offers its services as a fee-based manager but will consider equity stakes in lieu of some portion of fees depending on the transaction. DCM communicates deal performance closely with its stakeholders via monthly management reports. Strategic deal decisions – such as a material loan sales or servicer change – are usually decided with the client’s approval via formal investment committee.
DCM assets under management are distributed nationwide in the U.S (i.e., with significant concentration in the Northeast in general and in judicial foreclosure states in particular – see table 2). DCM is currently staffed by a managing director and four managers that are primarily responsible for the areas of:
- Asset evaluation and diligence; and
- Asset management and disposition planning; and
- Whole loan acquisitions and sales; and
- Financial analysis and servicer management; and
- Foreign market development.
BP Fisher Law Group, an affiliate of DCM reviews and manages all loan foreclosure activities and all loan modifications for assets under management. All of DCM managers have extensive and successful experience in asset management, capital markets and finance, and investor reporting. Loan payment processing, accounting, taxes, real estate management and sales functions are provided by licensed third party loan servicers specializing in NPLs and REO sales. DCM closely monitors and manages servicer performance and when and where necessary affects loan servicing transfers, either for performance or strategic considerations or both.
For new NPL supply, DCM participates with institutional sellers; FHA/HUD, FNMA, Freddie, Banks, and Hedge Funds. DCM is an approved bidder with HUD, Citi, Wells Fargo and currently co-bids on agency NPL pools with its investment partners. Collectively quarterly residential NPL offerings have been averaging approximately $500MM to $1B with pricing ranging from high 60’s to low and mid 70s as a percent of current BPO. Pool NPL valuations are done at the loan level and include but are not limited to; loan-to-value, loan size, property location, property condition, property marketability, servicing history and notes, payment history, unpaid taxes and Insurance, borrower capacity to pay, bankruptcy, foreclosure status and state law. Leverage is usually considered and readily available both short and on a long-term basis.