Back in 1893, Stewart Title Guaranty Company began operations in Galveston, Texas, and just like physical movement in the humid, coastal environment along the Gulf of Mexico, growth had been long, slow and meandering. It wasn't until 1956 that Stewart Title finally made the big leap forward, expanding beyond the state border into neighboring New Mexico. Fourteen years later, with its expansion into other businesses, the company changed its name to Stewart Information Services Corporation and in 1973 its new corporate office was erected in booming Houston. Eleven years later, the company began trading on the New York Stock Exchange. * Stewart Lender Services (SLS), the Houston-based subsidiary of Stewart Information Services, began its corporate life mimicking the parent, a long, leisurely unwinding after it was established in 1996. Then in 2007, the world changed. In quick succession, the country and, indeed, the world, faced a blowup in the mortgage markets, the credit crisis, Wall Street meltdown, a foreclosure epidemic and a prolonged recession. * SLS, which provides centralized origination, loss-mitigation and real estate-owned (REO) asset management, had to ramp up in a hurry. * The loss-mitigation and default management pieces were cranked out at the beginning of 2008. In December 2009, the company unveiled Stewart Asset Recovery, a full-service REO asset management and disposition provider. In October 2010, the company opened a new national processing center in Dallas, its third location for loss-mitigation call-center operations and refinance title and escrow processing in addition to Phoenix and Houston. * SLS also has operations in Irvine, California, and Tampa, Florida--both locations provide REO asset services, including asset management, eviction management, auction services, and REO title and escrow. In the Tampa location, with the tripling of staff, the company in 2010 signed a lease for a much larger facility.
While other industries and businesses--even title insurance--were retracting over the past four years, SLS was expanding in a big hurry.
In 2008, the company employed at most 70 people, says Jason Nadeau, SLS' president and chief executive officer. "At the end of 2010, we had over 500 staff, if you include temporary employees," he says.
And more hires are coming--loss mitigation and REO services are the areas expanding most rapidly--especially as Dallas gets up to speed.
"The move there was really a reflection of growth," Nadeau says. "We were expanding exponentially and running out of capabilities in Houston. In 2008, we opened a small office in Dallas."
Since then, SLS created in Dallas a new call center for loss mitigation and short-sale support, put in a second originations services group and doubled its operational footprint.
"We moved from a place that had 20 to 30 employees to a location that can handle 200 people," Nadeau says.
Not only had SLS' Houston facility used all its currently leased space, but as big as the city is, there was also a limited pool of experienced mortgage servicing workers. Dallas, on the other hand, was a mortgage servicing industry locus.
"The center of the mortgage servicing world shifts between Dallas and Jacksonville [Florida]," Nadeau observes. "These cities are key hubs of talent from a mortgage standpoint. All of our competitors can be found in those cities. It was important for us to move there, because we have a large customer base in Dallas. And Dallas has a very strong talent pool, especially on the REO side, and we are growing substantially in that business."
The secrets of growth
Along with the mortgage industry imploding and housing values being in free fall, millions of Americans have lost their jobs and homes since 2007. Foreclosures have overwhelmed the lending industry, which is why companies such as SLS that can help banks and other lenders deal with defaulted loans (either by processing foreclosed properties to prepare them for resale or retaining current ownership) have been in such demand. All companies in this part of the industry have been growing, and many have been doing this longer than SLS.
It's not always the companies that are first out of the gate that succeed in the end, but the ones that can operate better and more efficiently.
Loss mitigation, default servicing and REO asset management on the service end generally are considered hands-on...