Lakeport secures $175M joint venture via Finitive
As distressed mortgage rates rise, niche investor interest is following suit. Investing fintech platform Finitive announced it has facilitated a joint venture between real estate investment firm Lakeport Capital and an undisclosed investor, which according to a joint statement, “is a division of one of the top 50 global banks.”
Under the terms of the joint venture agreement, the investor has committed to purchasing up to $175 million in non-performing loans (NPLs). The new investment partnership also will use capital provided by Lakeport’s principals, and several other undisclosed institutional investors who purchase NPLs through Lakeport.
“Many banks and other lenders are looking to remove NPLs from their balance sheets, particularly post COVID-19, to reduce overall reputational risk and address long-term profitability,” said Yonel Devico, co-founder of Lakeport.
Under the terms of the joint venture, Lakeport will source, underwrite and manage NPL portfolios secured by single-family homes, condominiums, and one- to four-unit multifamily properties on behalf of the Investor.
The company specializes in buying distressed first and second-lien mortgages “in highly complex judicial foreclosure states generally avoided by other NPL buyers, such as New York, New Jersey, Connecticut and Florida,” according to the company website. These states currently have among the highest delinquency rates in the U.S. following the outbreak of COVID-19, according to the Mortgage Bankers Association.
Data suggest the effect of the pandemic will lead to a surge in delinquencies through the end of 2020 and beyond. The joint venture will focus on the acquisition of distressed residential mortgage portfolios in areas currently seeing higher delinquency rates.
Lakeport’s experienced investment management team reportedly has an average resolution-time of 13 months, from NPL purchase and workout to exit. As mortgage delinquencies increase, “now is an opportune time to purchase distressed mortgage portfolios,” Devico said.
Lakeport acquires defaulted NPLs at a loan-to-value of no more than 70%, from small banks, medium-sized banks and non-bank lenders, including mortgage finance companies, bridge lenders, and credit funds.
Once the Investor purchases the NPLs, Lakeport will work with homeowners to help them become current with payments, refinance and stay in their homes, and/or will buy business purpose loans and work out modifications.
Since being founded in 2017, Lakeport’s principals have been investing their own money. The joint venture transaction marks a turning point in the institutionalization of the firm, according to Jean Marc Orlando, co-founder of Lakeport.
Finitive connects Lakeport and other originators to a global network of investors through registered broker-dealer, North Capital Private Securities.
Regan Capital launches new fund
Reportedly catering to expected growth in demand from investors looking to expand their portfolios into the non-agency residential mortgage-backed securities (RMBS) space, investment advisory firm Regan Capital LLC, has launched the Regan Total Return Income Fund. Skyler Weinand, a managing partner at Regan Capital, will serve as lead portfolio manager of the new open-end mutual fund.
The fund will provide investors risk-adjusted, relatively high-level current income options through income-producing securities such as RMBS and other fixed-income asset-backed structured products, according to the company website. The U.S. Bank National Association will serve as custodian and Quasar Distributors, LLC as the fund distributor.
Weinand has led Reagan Capital since its inception in 2011 and previously served as head of residential and consumer asset-backed trading at Cantor Fitzgerald.
In addition to Weinand, portfolio managers Arup Saha and Chris Hall also have joined the fund’s management team. On average, they each have 18 years of experience in trading and managing portfolios of structured products.
“Regan Capital brings nuanced expertise and technical acumen to the structured credit markets,” said Weinand, adding that the launch of the new fund provides investors greater access to the investment philosophy of Regan Capital. “In particular, the Fund’s timely focus on non-agency RMBS aims to capitalize on the lack of yield available to investors in fixed income securities.”
According to Weinand the fund will aim to invest at least 80% of its net assets in mortgage-backed securities.
Furthermore, it will provide “a bottom-up analysis on collateral characteristics and capital structure to find both, deep value investments and trading opportunities,” paired with a top-down macro qualitative analysis, which among others contains key factors such as “economic outlook, interest rates and real estate.”
The fund features two company share classes that will incur different fees and expenses, the company said. The investor class, with ticker symbol RCTRX and a minimum initial investment of $1,000; and the institutional class, ticker symbol RCIRX and $100,000 minimum initial investment requirement.
Unqork & KPMG deliver loan forbearance app
The Coronavirus Aid, Relief & Economic Security (CARES) Act has presented lenders with an opportunity to support the communities they serve alongside new regulatory compliance, operational and digital capacity challenges.
Responding to such demand, a strategic alliance between audit, tax and advisory firm KPMG LLP and no-code enterprise software pioneer Unqork has resulted in a turnkey application that enables lenders to help borrowers independently submit loan forbearance requests for multiple loan types including mortgage, auto and personal loans – while in compliance with CARES Act guidelines.
Built as a self-service forbearance portal, according to a joint statement, the app makes it easy for borrowers to upload their information, so qualification criteria are automatically applied, “and requests are aggregated and presented for efficient review by loan officers.” The flexible, turnkey solution is equally easy for lenders or other businesses to adopt and run.
The alliance combines Unqork’s unique no-code platform designed to support enterprise applications in highly regulated industries, with KPMG’s extensive expertise in capital markets, banking, insurance and other industries, to help their joint customers from “the world’s largest and most sophisticated organizations address pressing business challenges.”
In a changing environment businesses need “adaptable solutions and scalable platforms that work quickly and can be tailored for the many new challenges we are seeing,” said Nalin Kumra, advisory principal, KPMG LLP. Together, KPMG frameworks and process knowledge, and Unqork’s “uncomplicated platform,” provide the speed and flexibility required for today’s digital financial processes.
Unqork’s loan forbearance app includes several key features.
- Allows users to input company information, instantly calculate Debt-to-Income Ratio (DTI).
- Integrates with existing systems and external data sources, including vendors’
- Enables email or text messaging to borrowers, application management, status tracking, servicing, notifications, and follow-ups.
- Creates custom dashboards so loan officers can review, track, and process requests in one place.
- Its custom landing pages offer client specific text and a clear acknowledgment box.
No-code technology enables Unqork’s enterprise no-code platforms users to build, implement and upgrade solutions faster at a lower cost, eliminating the need to hire dedicated software developers to make system changes, the company explained.
“The COVID-19 pandemic has accelerated the need for digital transformation and virtualization of services,” it is more important than ever to strengthen our communities through technology and to promote collaboration, said Harvinder Bhatia, managing director and Unqork’s U.S. alliance lead at KPMG.
KPMG and Unqork reportedly have been collaborating for over two years and teamed up to launch a Mortgage Forbearance and Loss Mitigation solution for the Community Preservation Corporation (CPC), a nonprofit multifamily housing finance company, and its subsidiary CPC Mortgage Company LLC.
“In our partnership on the CPC solution, Unqork and KPMG were able to quickly address an immediate need during a difficult time in a way that just worked for users when they needed it,” said Christian Barrera, vice president of alliances and ecosystem at Unqork. “But the kind of business challenge that solution solved exists in every company.”