Commentary by Mike Nierenberg, Special to California Business Journal
Thinking outside the box is a variation that means thinking unconventionally. It also implies that an individual should think with a unique emphasis on creating new perspectives regarding investment opportunities since the fundamental role of financial institutions continues to change. Therefore, this is the initial three-part series evaluation of an investment perspective of non-bank thinking as well as strategizing in the mortgage industry.
According to a research report by New Residential Investment Corp., it’s vital to make viable opportunistic investments coupled with business acquisitions that are influenced by thinking away from the bank. Investors, as well as financial services customers have mainly witnessed dramatic transitions in the banking sector over the last two decades. The atmosphere was triggered by two events that contributed to the appeal of the Glass Steagall Act, which was passed in 1999 coupled with the credit crisis that started in 2007.
The Glass Steagall repeal enabled banking institutions to make voluntary changes to their operations. Looking at an objective indicator of current non-banking trends for various mortgages, the residential mortgage industry share for traditional banking institutions has tremendously fallen from over 90 percent in 2009 to approximately 50 percent.
New Residential Investment Corp. enables clients to think beyond the usual setting of bank-related investments. As such, by any standard, the residential mortgage industry in the US is developing into a single-family mortgage debt that currently stands at approximately $10 trillion. Roughly 63 percent of people who own homes have a mortgage. However, as noted, the role of baking residential mortgages has vastly changed over the few years.
As reported by the New Residential Investment Corp., the mortgage sector is changing the manner in which mortgages are originated and serviced. The management of the organization firmly believes that significant investment opportunities currently exist in the mortgage industry. The management holds that the current investment opportunities are complex, especially in the dynamic mortgage market. New Residential Investment Corp. was founded in 2013. It originated from Newcastle Investment Corp. Today, it operates as a publicly traded firm that handles the real estate sector. Increased complexity in the residential mortgage has been complicated.
Nierenberg is a revered managing director with extensive experience in business development and leadership. He has vast experience in leading global mortgages and existing securitized products. He first served at the prominent Bank of America Merrill Lynch where he was responsible for sales as well as trading activities in the division. Having joined the institution in November 2008, he headed the department of securitized products in addition to global mortgage at JP Morgan.
Nierenberg also spearheaded the management committee by serving in various senior leadership positions for approximately 14 years at Bear Stearns. While serving as a board of director, he also spearheaded the department of adjustable rate mortgage. Nierenberg spent about seven years serving at Lehman Brothers too. At New Residential Investment Corp, Nierenberg oversees the completion of general operations. He helps in spearheading general operations and enhancing investment opportunities.
As the Federal Reserve System reported in the past 20 years, the housing market represents approximately $25 trillion in real value. The company has successfully delved into active as well as passive asset management as two main extremes that assist in describing portfolios. New Residential is an excellent illustration of a firm that manages investments, particularly in residential mortgage assets. Since active management styles, as well as strategies, are two significant extremes when it comes to describing portfolio management styles, New Residential Corp. seeks to evaluate various management styles incorporated into the industry. It offers an analysis of different styles of management integrated in the business.