OK folks, so here is the first of many servicers getting bought...
My money is that Ross will file for bankruptcy protection to shield him from the various class action suits (he is a bankruptcy expert), and buy additional distressed servicers (also shielding his investment under bankruptcy protection) and package the whole deal together and then re-emerge from bankruptcy to reap his windfall.
I bet it will take less than 24 months, and Ross will make at least 5-7 times his investment. Anybody want to take the bet?
Wilbur Ross Snags AHM Bid; Billionaire Investor, In $435M Offer For Loan-servicing Unit, Is Banking On Rebound In Mortgage Industry
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Wilbur L. Ross Jr., who became a billionaire by investing in failed steel and textile companies, won the bidding for the loan-servicing unit of bankrupt American Home Mortgage Investment Corp. with a $435-million offer.
Ross, 69, is betting on a rebound in the mortgage industry after at least 16 lenders, including American Home of Melville, collapsed when investors refused to buy loans they made to borrowers with poor credit.
The mortgage industry may be ripe for a Ross-led turnaround because of his experience with financial companies, said Robin Phelan, a Dallas attorney who has worked on cases with Ross.
"The mortgage business is even more up his alley than the other ventures," Phelan said. "You don't need metallurgical engineers in the mortgage business."
American Home canceled an auction because no higher offers were received before scheduled bidding Friday, creditor lawyer Mark Indelicato said. That left Ross, the so-called stalking-horse bidder, as the winner.
Ross has said he regarded the mortgage industry, like others he had invested in, to be "a very fundamental" one in the United States. "It's a big business. It's not going to go away," said Ross, who formed WL Ross & Co. and paid $250 million for the distressed investments of his former employer.
Ross was dubbed "The King of Bankruptcy" by Fortune magazine in 1998 for his role in buyouts in industries other investors shunned. He founded his own firm in 2000 after working for more than two decades at investment bank Rothschild Inc. in New York, where he was a senior managing director specializing in bankruptcy advice.
American Home Mortgage, once one of the nation's 10 largest mortgage lenders, collapsed at the beginning of August, filing for bankruptcy on Aug. 6 and laying off most of its 7,000 employees, including 1,400 on Long Island.
A number of civil regulatory agencies have said they are looking into the company's demise, and at least a dozen securities-related civil class actions have been filed, most charging that the company misrepresented its financial situation to shareholders, who are not expected to recover any money as a result of the bankruptcy.
Meanwhile, federal prosecutors and the FBI have opened an investigation into whether criminal misconduct was involved in the collapse, according to several sources familiar with the situation.
The investigation, described as being in its preliminary stages, is looking into whether various federal criminal statutes have been violated that resulted in the company's bankruptcy, the sources said. Among the statutes are conspiracy, securities, mail and wire fraud, and money laundering, the sources said.