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Vadium Has Eye on Construction Loans Gone Bad
By Ted Cornwell
Vadium Group, based in Mobile, Ala., has a new take on entering the loss mitigation business.
The new firm, founded by mortgage industry veteran Joel Pate, is willing to take on home construction loans that have gone bad. Recently, the firm just inked its first client deal, a contract to manage 98 construction-to-borrower loans.
Mr. Pate and his team bring more than curiosity to the single-family construction asset management and loss mitigation world. The company's leaders have a background in doing construction loans, having worked on more than 10,000 of them. Mr. Pate personally oversaw the construction and sale of more than 500 homes earlier in his career with homebuilder Miranda Development. He has also been involved in over $100 million of construction loans and over $1.3 billion of residential lending. Mr. Pate's goals for Vadium are relatively modest. He said he'd like the firm to manage about 1,000 transactions within the next year.
"Every different loan has its own story," he said. "We think the intellectual capacity and experience that we put together is not scaleable."
Vadium can help clients, such as banks that hold nonperforming or stalled construction-to-borrower and construction-to-permanent loans, improve their recovery. Many of the loans involve second-home or investor-owned property.
Vadium can help clients analyze the property to assess whether or not it should be sold "as is" or construction completed. The firm recognizes that in the construction loan world, collateral is a lot trickier to analyze than it is for an existing single-family home that winds up in foreclosure.
"Can I lose less money if I finish the house, or will I lose less money if I sell it as is?" is the question Vadium addresses for clients, Mr. Pate explained.
In addition to assessing the options, Vadium can manage the process of completing construction and maintaining the property if a client chooses to go that route.
Vadium plans to focus on key markets that have seen a lot of residential construction lending, including Florida, Georgia, Nevada and Texas. That's where plenty of people acquired property or signed new home contracts at the peak of the market, only to find that their home - halfway finished - may not be worth what they paid for it.
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