Hello, LOs!
Early this morning, New Residential Investment Corp. announced that it had made yet another acquisition play. The company, which bought Caliber Home Loans earlier this year for $1.71 billion, is buying Goldman Sachs-owned Genesis Capital LLC.
New Residential says that Genesis, a specialty lender that does business purpose lending, better known as fix-and-flip, is expected to generate about $2 billion in loans this year and has originated over 12,000 loans since 2014.
Terms of the deal were not disclosed.
But let's talk about this market; it's an interesting space.
In March, AlphaFlow, an investment firm that buys real estate loans from lenders, reported that more than 60 banks and other firms were financing flippers, up 50% from even two months prior. Many of the lenders that have entered the space are not household names: Toorak Capital, Cutter Hill Capital, Builders Capital.
The average annual rate on a fix-and-flip mortgage is around the 8% range, and most loans tend to be short-term, often less than a year. That's appealing in a rising rate environment.
AlphaFlow estimates that flippers could sell $75 billion worth of homes over each of the next two years, compared with an average of around $56 billion in the prior three years, Bloomberg reported.
So, LOs, here's my question to you: do borrowers express interest in this type of product to you? Is this a product you'd want to sell? Let me know. I'm at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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