Forums: Discussions for entrepreneurs and small business.

I am looking at starting a warehouse lending company.  I will be funding reverse mortgages that will be sold to Fannie Mae, Metlife, and securitized and sold to investment firms.  With the current view of anything related to mortgages plus the negative view of reverse mortgages, I am having trouble finding money with whichto fund.

 

The investor is well secured with ownership in the note until it is bought by the secondary market (i.e. Fannie, Metlife, etc) plus a $50,000,000 Letter of Credit from a multi-billion dollar investment firm (they will be handling the securitization).  I am looking for $30,000,000 and will pay 12% on the money used to fund with a 50% minimum.  If the investor invests $10,000,000 they will make a minimum of $600,000 per year.  Investments can be either cash or line of credit, with a minimum investment of $3,000,000.

 

Where would I find investors willing to take a chance?

Hi,

 

       From what i know the mortgage market has passed away. I have friends holding several properties who are stuck.

 

       Anyways i am a major shareholder of a mine in south east asia. We deal mainly in facetted rubies and sapphires. You seem to know a bit about banking, as a mine we are allowed to issue commodities demand certificates. If you want you can broker them for me and i pay you a commission.

 

Let me know if you are interested

 

Ricky

Thanks Nick.  Where would I find a list of mezzanine lenders? 

 

I do have a history of managing in this arena.  I currently work for a bank that does some warehouse lending, but it does not have the capacity I am needing.  The company I will begin working with has been running about $75M - $80M a month through an $8M line (about 500 - 600 loans a month).  They are migrating to start securitizing fixed rate reverse mortgages.  This more than doubles their revenue.  They are in negotiations with hedge fund to sell a $100M package of loans.  The $50M letter of credit would be there to guard against any loss to the investor/lender.

The company (my client) makes money a couple different ways.  First, they charge an origination fee which averages about $300 per loan.  The second way is through an interest rate premium when they securitize and sell the loan.  On average the premium is around 2.5% of the loan amount.  With the average loan being $200,000, the premium is around $5,000 per loan.  Some of this is paid to the brokers, around $1,000 - $1,500.

 

My company would manage his line(s) and charge 15% of the money he uses with 12% going to investors and keeping 3% as a management fee.  The client can afford to do this because it is making 30% (2.5% X 12) or more.  To protect the investors ROR, there will be a minimum daily balance.