Unity Financial Services LLC, a start-up that specializes in working out soured mortgages and unloading repossessed properties, is hoping its ties to a minority-owned bank will help it win business with government-related entities.
The Fort Worth loan servicer is 51% owned by the $59.8 million-asset Unity National Bank of Houston, which bills itself as the only African-American-owned bank in Texas.
Troy Austin, Unity Financial's president and the founder of Canvas Realty Partners LLC (which owns the other 49%), said the start-up plans to bid on contracts from Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corp.
The majority shareholder's status as a minority-owned business will be "a great benefit," Austin said in an interview Monday. "There is no set-aside program, but if you read Tarp and the Emergency Economic Stabilization Act, there is strong encouragement for federal agencies to utilize minority subcontractors."
The act, which was passed last year and created the Troubled Asset Relief Program, says minority contractors, including asset managers, servicers and property managers, should be used "to the maximum extent practicable."
Similarly, on Monday the Treasury Department said it will encourage minority- and women-owned businesses to participate in the securities portion of the Public-Private Investment Program — "if necessary," by partnering with the fund managers selected for the program.
Unity Financial will also seek assignments from institutions that have received Tarp aid or are acting as agents of the government by working out toxic assets.
"If we're able to show the servicer or the bank that receives the Tarp funding that we are an entity that falls in line with" minority contracting requirements, "then we will at least be able to get their ear," Austin said.
He also said Unity National's minority status provides a "political advantage." But John Scroggins, the bank's president and chief executive, downplayed that idea in an another interview.
"We have no advantage politically, other than that we are what they're looking for right now," Scroggins said. "We are positioned to do this based on our experience and know-how."
Unity National is a certified member of the Treasury Department's minority banking deposit program and has been designated as a minority-owned enterprise by the Small Business Administration.
"Part of the legislation mandates that you must have a minority component, but what gives us the advantage is partnering with Canvas," Scroggins said.
Charles Sanders, the owner and CEO of Urban Settlement Services LLC, a Pittsburgh firm that provides loss mitigation services to Bank of America Corp. and other lenders, said the language in the Tarp legislation is "pretty vague," because it does not specify the size of companies that bankers should be encouraged to use.
"My concern as a leading minority business enterprise is that to play in this whole loss mitigation world, you have to be of a certain size, which hinders minority companies," Sanders said. Still, "the Tarp language has brought minorities back in, so there will be more supplier diversity."
There are roughly 214 minority-owned banks in the United States, according to the National Bankers Association, a trade group for them.