Private Equity

Private Equity — Private equity firms raise committed capital through fund structures, then deploy that capital into acquisitions that are not available on public exchanges. In the mortgage note industry, PE-backed buyers are among the largest purchasers of distressed and re-performing loan pools, often acquiring portfolios directly from banks, government agencies, or securitization trusts.

Smaller note investors encounter private equity influence at multiple levels. PE firms set pricing benchmarks on large pool trades, which in turn affects the cost of the smaller "scratch and dent" tapes that trickle down to individual buyers. Some independent note investors also raise capital from PE-style limited partnerships, adopting similar fund structures — complete with preferred returns, management fees, and waterfall distributions — scaled down for portfolios of dozens rather than thousands of loans.