Near record lows in U.S. mortgage defaults last year spelled good news for homeowners but bad news for one private-equity firm, WSJ Pro Bankruptcy reported. Mortgage Contracting Services LLC, a Lewisville, Texas-based company backed by private-equity firm American Securities LLC, has seen its revenue decline in recent years and its roughly $435 million in debt is now trading at distressed levels. American Securities bought the company in 2017, betting on a business that profits when homeowners default on mortgage repayments and lenders foreclose on their property. MCS’s core business involves maintaining and managing properties left empty after foreclosure. The company’s services include changing locks, mowing and weeding lawns, as well as helping manage evictions, according to its website. Past clients include U.S. mortgage lenders Fannie Mae and Freddie Mac as well as the U.S. government, the website stated. But the private-equity firm’s bet on the company hasn’t gone as planned. The company’s $435 million term loan is trading at 48 cents on the dollar, according to IHS Markit Ltd., putting American Securities’ investment at risk. Loans trading below 70 cents on the dollar are typically associated with a high risk of default.
