Fortress Investment Group has closed the Fortress MSR Opportunities Fund II at its cap of USD1.1bn.
MSR Fund II is a successor fund to the Fortress MSR Opportunities Fund I, which closed in August 2012 with USD608m in total commitments.
Fortress’s MSR Opportunities Funds are focused on investments in residential mortgage servicing rights (MSRs). An MSR represents the contractual monthly fee paid in exchange for the servicing of a mortgage loan, net of a basic servicing fee.
Fortress and its affiliates have been among the most active investors in the MSR space over the past two years, having invested or committed to invest in MSRs with an aggregate underlying unpaid principal balance of over USD315bn. Fortress has pursued opportunities in the approximately USD10trn mortgage servicing sector through a co-investment structure in which a dedicated MSR Fund and New Residential, a Fortress-managed publicly-traded REIT, invest alongside Fortress portfolio company Nationstar.
“This is a transformative period for the servicing market that we believe will present substantial opportunities in the coming years,” says Wes Edens (pictured), Fortress co-chairman and head of private equity. “As one of the earliest and largest investors in the servicing space, with significant experience as an owner/operator of major servicing platforms, we’re confident we can capitalise on those opportunities on our investors’ behalf.”