Trimont Set To Become Largest U.S. Commercial Loan Servicer After Buying Wells Fargo Debt Portfolio
Trimont has reached a deal to acquire part of Wells Fargo’s loan business that would make the Atlanta-based firm the largest loan servicer in the United States.
Trimont plans to buy Wells Fargo’s nonagency, third-party commercial mortgage servicing business. Trimont declined to disclose the terms of the deal, but the company said it would boost its servicing portfolio to $640B in U.S. commercial loans, or 11% of the U.S. market.
If it closes, the deal will see roughly 710 Wells Fargo employees move to Trimont, which has around 425 staff focused on debt service, Trimont CEO Bill Sexton told Bisnow Tuesday.
"Trimont is very strong in the nonbank lending sector. The division we're acquiring out of Wells Fargo is very focused on the capital markets and securitization market," Sexton said. "Putting these two businesses together now, we think, positions our business really well for what is coming in this stage of the cycle."
Wells Fargo was the largest commercial mortgage servicer in 2023, with $669B across 39,759 loans, according to the Mortgage Bankers Association. Trimont was No. 10 at the end of last year, with $145B in serviced debt across 30,450 loans.
The sale is expected to be finalized in early 2025 and would leave Trimont with a combined global commercial loan portfolio of $715B, according to a release. The debt servicer manages $240B in loans for assets across 72 countries.
PNC Real Estate was the second-largest mortgage servicer in 2023, with $646B in debt serviced across 24,378 loans.
The commercial mortgage servicing business is primarily focused on securitized debt products, including CMBS loans, collateralized loan obligations, single-asset, single-borrower loans and Freddie Mac K-Series debt.
The proposed Wells Fargo sale includes only the debt servicing and no associated assets. That fee-for-service structure helps insulate the debt servicers from potential market volatility.
Sexton estimates there is roughly $2T in debt set to mature in the next three years, which creates an opportunity for his fee-for-service firm.
"We are cycle-agnostic," Sexton said. "Our performing book grows when there is more activity in the origination market, and our nonperforming book grows at the time when the market isn't growing, when there's more work for [servicers] to do to try to resolve things."
Global alternative investment firm Värde Partners, which has owned Trimont since 2015, will provide funding for the transaction.
Wells Fargo is jettisoning its third-party commercial mortgage servicing business as CEO Charlie Scharf streamlines the bank’s operations. The bank has been shrinking its home loan portfolio since early 2023 while leveraging its franchise model to grow its corporate and investment banking presence.
"This transaction is consistent with Wells Fargo’s strategy of focusing on businesses that are core to our consumer and corporate clients," Wells Fargo Head of Commercial Real Estate Kara McShane said in a statement.
Several banks have sold pieces of their commercial mortgage debt service business this year, frequently trading the notes for a loss, Commercial Observer reported in June.
Canadian Imperial Bank of Commerce reportedly found a buyer for a $316M portfolio of loans on office buildings in Austin, Phoenix, Seattle and San Francisco at a discounted price.
Morgan Stanley agreed in May to buy $700M in property loans that had once been assets for Signature Bank, which collapsed in March 2023, that had been serviced by Blackstone, Rialto Capital and others.
