Goldman-Backed Non-Bank May Test Origination Waters

Arch Bay Capital, an active buyer and seller of non-performing, or defaulted, mortgages, is on the verge of jumping into the origination market and is busily gathering lending licenses in several states, according to officials briefed on its plans.

A non-bank based in Southern California, Arch Bay made news last year when it bought $600 million in nonperforming loans from Wells Fargo. It also recently issued a bond backed by NPLs.

A company official confirmed to National Mortgage News that Arch Bay is working on something tied to originations but would not comment further.

The firm, though, has created a website for a unit called Arch Bay Mortgage that said, "Coming Soon."

Industry sources said some of Arch Bay's financing comes from a special fund controlled by partners at Goldman Sachs.

One lender in the Southern California market said he has heard of Arch Bay's plans, but questioned its timing. "They're getting in at a time when fundings are shrinking," he said.