The irony about the ongoing crisis in America’s residential real estate and mortgage markets is that it has attracted the altruistic and capitalistic in equal measure. People want to help others who are having financial difficulties and are in danger of losing their homes, while others look at the wave of foreclosures and defaults and see investment potential.
Although some may view this phenomenon in terms of positive and negative, I strongly believe it will take both of these truly American characteristics to clear away the housing problems that have bedeviled us for the past three years.
As such, I’m always attracted to the person who has a business concept that straddles both positions. They run healthy, forward-directed businesses while at the same time trying to address the social issues stemming from the housing fallout.
Steve Ozonian is one those people; he’s a capitalist and an altruist. He doesn’t run a property company and he doesn’t directly invest in real estate. His firm, Sorrento Capital in Irvine, Calif., is a private asset management firm that invests in mortgage technology companies.
I first came across Sorrento Capital last year when I noticed it had acquired an Internet company called REO.com, which bills itself as a marketplace for the sale and purchase of foreclosed and preforeclosed properties.
It was a small acquisition and probably wouldn’t have attracted my attention, but after scanning the Sorrento Capital press release about the transaction, I saw it was more than just another equity investment firm. These people had focus.
In addition to REO.com, Sorrento already owned a portfolio of related companies, including: InformationLogix, which creates software for the administration of default-related servicing and asset management; The MOS Group, a loss mitigation service provider for the mortgage industry;MortgageOutreach.org, a consumer education Web site providing guidance to borrowers having difficulty affording and paying their mortgages; and ReviseMyLoan.com, which helps borrowers determine what government and lender programs may qualify for loan modifications.
I called Steve Ozonian to talk about his game plan for the distressed mortgage business.
"Sorrento Capital invests in assets that are related to helping homeowners relieve themselves of the stress associated with having too much mortgage debt," Ozonian explains. "Having too much mortgage debt can’t be separated from other problems in their lives. This is a waterfall. People start missing their credit-card payments, then car payments, then the last thing is they lose their homes."
Sorrento Capital originally owned just one company in the mortgage distress space, InformationLogix, which built software for large financial institutions that needed to service distressed borrowers. It then acquired The MOS Group, another firm that was directed at aiding large financial companies.
The MOS Group boasted a unique product that would find borrowers who were starting to miss mortgage payments, and serve as intermediary between the financial institution and the consumer. Sorrento executives realized this service could be of use to consumers as well. As a result, the company created the ReviseMyLoan.com website. …CONTINUED
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