A large part of the Private Money Trust Deed investment market has been gobbled up by the Institutional Non-QM Mortgage Companies backed by Wall Street Investment Companies seeking higher yielding investment strategies. Trust Deed Investors are being squeezed out of the market and replaced by large aggregators.
Wall Street’s growing demand for these products have driven these lenders to expand and ultimately soften underwriting guidelines – similar to what happened in the subprime crash of 2005 – 2007. The biggest difference being that the lower credit profile borrowers did not get to the high Loan-To-Value’s of the subprime meltdown and the Non-QM loans had higher standards for qualification.
The COVID-19 virus financial crisis and the downturn of the stock market has created liquidity issues for the Non-QM lenders causing them, as well as Wall Street to rethink their strategy moving forward. As a result, many of these lenders will go out of business and the survivors will ultimately tighten their underwriting guidelines.
Lenders are in a wait-and-see mode and will soon be reshaping their business models. In the next 30 – 90 days these lenders will come out with less aggressive more conservative lending guidelines.
What does this mean?
Borrowers have been left in the dark or have had transactions that were cancelled by these Non-QM lenders. Many Non-QM lenders will not survive this crisis.
Why is this an opportunity?
Over the next several months there will be a high volume of good conservative loans requiring private lender funds. With Bank Money Market Rates at historically lows, White Oak Holding’s plan is to focus on lower loan to value loans (60% or less) with yields from 5% – 8% with 6 month – 3 year terms.
How to Take Action
If you have money sitting in the bank – earning very low money market rates, give us a call at 626-988-0560 or email us at firstname.lastname@example.org.
We are looking for sophisticated investors with $500,000 – $100 million.