Indianapolis-based Stonegate Mortgage Corp. has received funding from Long Ridge Equity Partners, a private-equity firm, to help it expand in mortgage origination and servicing, the company said Monday.
The lender will use the money partly to continue retaining mortgage-servicing rights generated by its lending, Stonegate CEO Jim Cutillo said. The company may also buy existing servicing contracts from banks and build a portfolio of so-called jumbo loans, he said. Jumbo mortgages are larger than allowed in government-supported programs, currently as much as $729,750 for single-family properties in certain areas.
The investment was $25 million, according to Whit Clay, a spokesman for Stonegate. Long Ridge sees an opportunity to profit through a firm able to acquire servicing rights because of the low interest rates and high credit quality of new loans and recent retreats from the business by several large banks, said Kevin Bhatt, a partner at the New York-based firm.
“For us, a flat overall market is actually OK because there’s more market share available,” Cutillo said.
Stonegate lends directly to consumers, as well as through brokers and correspondents. It originated about $1 billion of mortgages last year and expects volume may total about $2.5 billion this year and as much as $5 billion in 2013, according to Cutillo. It owns about $1.5 billion of servicing rights, he said.
Stonegate will appoint Richard Mirro, former chairman and CEO of North American Mortgage Corp., to its board as part of the deal. Mirro is a member of Long Ridge’s financial-services advisory board.
Stonegate was founded in 2005 and was based in Fishers before moving its headquarters last year to The Precedent office park near Keystone Avenue and East 96th Street in Indianapolis, to accommodate a planned expansion.
In December 2010, Stonegate pledged to hire 300 workers by 2015 and expects to add 100 of those by the end of this year, CEO Jim Cutillo said. With $15.4 million in revenue at the end of 2010, the firm was the second-fastest growing company in the Indianapolis area, according to IBJ statistics. Its grew revenue 491 percent from the previous three years.