A Message From Our Founder

Dear Friends and Fellow Investors,

We understand this market has its own set of challenges.  Certainly, the federal government has stepped up in unprecedented ways to accommodate the Coronavirus, including increased unemployment benefits, and providing over $350 billion in SBA Covid-19 Loans as part of their 2 trillion dollar package.  In addition to traditional government debt, the Federal Reserve has expanded quantitative easing to include corporate & consumer debt. Fannie and Freddie Mac, which own 80% of the residential mortgage market, have allowed a 180-day forbearance on mortgage payment and restricted foreclosures. There is a giant backstop being put in place.  

Regardless of an up or down market, our business model revolves around a tried and true set of principles built over 23 years, including (1) The short term nature of our loans of 9-12 months, allowing for substantial flexibility vs. traditional lenders (2) We require a minimum of 30-40% equity on every loan (3) Our risk profile is spread nicely among hundreds of smaller balance loans vs. concentrated higher balance loans (4) We remain smaller than most industry firms, allowing us to cherry-pick the best loans, as less than 10% of our loan requests result in approved loans. (5) We focus on mostly entry-level housing, which has the largest pool of natural buyers and the most aggressive take-out financing in the marketplace.

We are also unique since we are not dependent on outside lenders to fund our loans, and we see our healthy liquidity as a net positive going forward since we are able to charge more for our loans vs. last year. We are still seeing healthy demand for loans, strong payoffs, and we remain committed to our stringent underwriting standards on every loan. Our delinquency rate remains under 1%, and we see no uptick in our servicing platform.  We will continue to leverage our small size and continue to cherry-pick only the very best loans. Long term, there is still a shortage of entry-level housing, and even lower rates will influence demand.  

As always, please email Stacey, Sabrina, or myself, and I wish you and yours the best health during this period.

Best,

Max McDermott

Founder