Mortgage Contracting Services, a company known in the industry for its default and real estate owned services, has recapitalized and undergone a change of ownership.

The group of investors acquiring the company included Littlejohn & Co., Lynstone SSF Holdings Sàrl, Crescent Capital Group and funds advised by Neuberger Berman Alternatives Advisers.

The acquisition “substantially” reduces the company’s debt and gives it access to long-term financing, according to a press release MCS issued Monday.

“We are excited to partner with our new owners to further strengthen our operations,” CEO Caroline Reaves said in the release.

MCS CEO Caroline Reaves

Financial terms of the transaction were not disclosed.

The move comes three years after private equity firm American Securities purchased MCS from Concentric Equity Partners in May 2017.

MCS has been an active acquirer itself in the last four years. In 2016, it purchased Epiq Real Estate Solutions and Lenders Title Solutions. In 2017, after its acquisition by American Securities, MCS bought Carrington’s property preservation division. Last year, MCS purchased M&M Mortgage Services.

M&A and investment activity in the distressed mortgage market may be picking up in part because more demand for distressed mortgage services is anticipated due to high unemployment and widespread economic uncertainty.

Distressed loan servicing is heavily regulated and has high costs, so companies in the business must have a combination of efficient and compliant operations to be effective and generate sufficient returns.

As a result, some companies may be looking for investors to help them pay for rising expenses, while others seek to acquire or invest to build economies of scale.

Other recent examples of acquisitions with a distressed mortgage component include Lereta’s purchase of Accumatch, a company that provides escrow tax payment services, non-escrow tax services and custom delinquency services for loan servicers.

“We have seen firsthand that the tax industry has been underserved with expertise and innovation, we are excited to combine our organizations,” said Brad Martin, chief technology officer at Lereta, a provider of real estate tax and flood services.

The terms of the deal were undisclosed.





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