Where Planet Home Lending sees acquisition opportunities

Planet Home Lending has launched a new commercial servicing unit and plans to continue to build out its business in other ways, including further acquisitions.

In addition to the new division led by Planet Management Group Executive Vice President James DePalma, the company will continue be a selective buyer of government mortgage servicing and other assets.

When asked about the decision to open the new commercial division, Mike Dubeck, president and CEO of Planet Home Lending, said, "With rates going up, I think there's going to be a lot of pressure in the commercial space, and it's good to have a couple irons in the fire outside of pure resi."

The new division will provide primary and special servicing to other institutions and be outfitted to handle income-producing products like fix-and-flip loans, or financing secured by multifamily, commercial or portfolios of single-family rental properties.

While nonbanks in the mortgage industry have tended to be monoline institutions, the recent origination slump has been prompting more to pick their spots in the single-family mortgage business and in some cases diversify beyond it.

"I think you might see more of this," he said when asked about the expansion into commercial servicing. "There are going to be opportunities in distressed commercial real estate, obviously, and I know one or two of the mortgage REITs are saying, 'Should we be playing there?' I think people are just trying to find different ways to make money in a difficult environment."

Meanwhile, "M&A-wise, we've been pretty opportunistic either on the servicing acquisition side, with branches or small retail lenders," Dubeck said.

"It's not a great time to be in retail with rates and home prices where they are and the lack of housing supply, but it's a good time to be investing in retail for the next run," he added.

He also noted that the Planet's acquisition of Home Point Capital's correspondent business last year has been paying off for the company.

"We doubled our client base and we've become a substantial liquidity provider, particularly to the smaller lenders in the Ginnie Mae universe," Dubeck said.

When asked about goals for the correspondent business, Dubeck said that it's driven primarily by the opportunity to buy the mortgage servicing rights associated with it.

"Correspondent is a negative cash-flow business. You're basically writing a check to get an MSR at a discount," he said. "On the direct lending side, everyone has reduced their fulfillment resources, and you're hoping you've sized your volume to how you built your factory, right? While correspondent is more about managing for liquidity."

Planet, like others, has seen somewhat of a rebound in production volume in the past couple months that Dubeck chalks up to relatively lower interest rates.

"We had a record lock month in March. It's probably the first month that our direct lending volumes exceeded our forecast. It stayed there in April," he said. "Hitting your forecast is everything and it's a challenge. You can't forecast interest rates well in this environment.

"It's going to be an interesting year," Dubeck added. "You'll hear about more consolidation, more acquisitions and not only by us. There are servicing platforms up for sale right now. We'll see where they go."