Originate Report - December 2021 by Originate Report

December 2021

THE OFFICIAL MAGAZINE OF GERACI

INSIDE: INVESTING OPPORTUNITIES

Esprit de Corp

Bill Tessar, CIVIC Financial Services

Housing Market Moves Toward Equilibrium in 2022

DIVERSIFICATION MATTERS

Both in Life & Business

INVIGORATE FINANCE

Optimization via Collaboration

How Fiduciaries Should Approach the Crime of Wire Fraud AND MORE... December 2021 Originate Report 1

CONTENTS DECEMBER 2021 COVER STORY 6

Esprit de Corp - Bill Tessar, CIVIC Financial Services

By Lindsey Goodrow, Contributing Writer for Originate Report

FEATURED ARTICLES 20 RCN Capital - Mastering Organizational Flexibility as a Lender

By Mark Dewyea, Contributing Writer for Originate Report

22 Diversification Matters - Both in Life & Business

By Mark Dewyea, Contributing Writer for Originate Report

28 Invigorate Finance - Optimization via Collaboration

By Mark Dewyea, Contributing Writer for Originate Report

CONTRIBUTED ARTICLES 12 Year In Review - The Highs and Lows of 2021

By Lucas Sambrook, Esq., Roc Capital

16 How Fiduciaries Should Approach the Crime of Wire Fraud

By Ryan Castle and David Adams, Conduit Security

26 Eye to the Future

By Brian Mingham, CFSI Loan Management

32 More Investing Opportunities Will Emerge as the Housing

Market Moves Toward Equilibrium In 2022

By Daren Blomquist, Auction.com

INDUSTRY NEWS 37 Arixa Capital Surpasses $2 Billion in Origination Volume

38 ABS Announces Integration with Lightning DocsTM,

Geraci LLP’s National Loan Document Solution

39 Pretium Acquires Anchor Loans to Deliver Enhanced

Capital Solutions for Homebuyers

41 Mortgage Automator Integrates with Lightning Docs™

a Loan Document Generation System by Geraci LLP

42 Roc360 Announces the Closing of its Inaugural Residential

Bridge Loan Securitization

43 RCN Capital Announces Executive Director of Retail Loan Development December 2021 Originate Report 3

MAKE WAVES AT

APRIL 11-12, 2022 NEWPORT BEACH, CA Interested in attending or sponsoring? Contact Ruby Keys at r.keys@geracillp.com Balboa Bay Resort 1221 West Coast Hwy. Newport Beach, CA 92663 (949) 379-2600 | www.geracicon.com 4

Letter from the

CEO

Editor

Welcome to the December edition of Originate Report!

Geraci LLP

As this year of Originate Report comes to a close, I want to reflect

ANTHONY GERACI

on the growth and change, not only in the industry, but also here

a.geraci@geracillp.com

at Originate Report. We’ve switched up the frequency of this

Senior Vice President, Marketing LESLEY BOYD l.boyd@geracillp.com Lead Graphic Designer LYNDA HIGHT l.hight@geracillp.com

publication, created themed issues, grown our subscription base, and featured some of the most influential firms in the industry. But, one thing has remained constant: the talent of our in-house lead graphic designer, Lynda Hight, without whom our bi-monthly magazine would not be possible. Thank you for all that you do! I’d also like to thank all our cover story companies this year who have shared their journeys with us as well as all the featured companies that have graced our pages this year. We hope you will continue to #shareyourstory with us in the years to come. For our final issue of this year, we had the pleasure of speaking with a company that undoubtedly has changed the landscape of

CONTRIBUTORS

private lending. This is a company that takes their culture and

Daren Blomquist • Lucas Sambrook

belief system to a new level – infusing every internal and external

Ryan Castle • David Adams • Brian Mingham Lindsey Goodrow • Mark Dewyea

interaction with their core values in mind. Led by the inimitable Bill Tessar, CIVIC Financial Services has reached new heights this year. Throughout the COVID pandemic, “CIVIC has doubled down on marketing and customer experience, relying on their People and Culture Team to lead the charge.” Their efforts caught the

FOUNDING UNDERWRITERS

attention of Pacific Western Bank, who took note and ultimately decided to acquire the company – a move that has further bolstered the market share that this firm had previously obtained. Check out our cover story to learn more about Bill Tessar and the incredible ride that CIVIC has taken for the past year and more.

MARK HANF President, Pacific Private Money

There is no better time than now to start planning for next year. #Innovate2022 will be here before you know it. With sponsorships selling fast, reach out to our team to learn more. Check out www.geracicon.com for details.

ORIGINATE REPORT www.originate.report GERACI LAW FIRM www.geracilawfirm.com LIGHTNING DOCS www.lightningdocs.com CONFERENCE LINE www.geracicon.com

Want to be our next cover story? We’d love for you to #shareyourstory with us. Contact us to find out how: submissions@originate.report Until next year,

Lesley Lesley Boyd Senior Vice President, Marketing

December 2021 Originate Report 5

COVER STORY

Esprit de Corp Bill Tessar, CIVIC Financial Services By Lindsey Goodrow, Contributing Writer for Originate Report

Bill Tessar, President & CEO, CIVIC Financial Services

Bill Tessar

Leadership meeting at CIVIC headquarters in Redondo Beach, CA

ill Tessar took the helm of CIVIC

Financial

Services

back in 2017, three years

into its founding, and turned it on its head. He guided the company into becoming one of the leading institutional private money lenders in the industry. CIVIC Financial Services, headquartered in Redondo Beach, California, provides bridge, fixand-flip, rental, rehab, construction, and multifamily loans in 29 states. As one of the premier private lenders

Tessar to discuss CIVIC’s banner year,

leadership, the strength of his team,

his thoughts on leading the company,

and the power of a publicly traded

and how CIVIC will continue to

bank behind them, the company’s

transform the industry as a whole in

continued momentum has poised it

the years to come.

to reach new heights. Tessar says,

The Transition CIVIC has funded more than $6 billion in loan originations since

in the country, CIVIC's products are

its start. That includes $1.7 billion

available through retail, wholesale,

in 2021, a huge milestone after the

and correspondent channels.

four years it took them to reach that first billion, and light-years away

For the Year in Review issue of

from the $20 million per month they

Originate Report, we sat down with

averaged back in 2017. With Tessar’s

“the runway is long and wide, and [CIVIC] intends to use all of it.” When

the

company

brought

Tessar, they knew they were adding a heavy hitter. A veteran in the industry - before it even was an industry - Tessar founded New Civic Financial: Continues on pg. 8

December 2021 Originate Report 7

Civic Financial: Continued from pg. 7

Freedom Financial in 1989 and then Capital Line Financial in 1995, both retail mortgage banking firms that

specialized

residential

and

conventional commercial

mortgages and employed up to 150

But there was more on the horizon

of that reference and some of those

for the visionary leader. Tessar

disciplines to CIVIC that we could

left a remarkable 30-year career

actually build something special.”

conventional

lending

join

CIVIC because he saw the untapped

Built on a Strong Foundation

potential of the company and the

In order to get CIVIC to expand and

private lending industry as a whole.

grow the way Tessar envisioned, there needed to be an unbreakable

loan officers combined. When he went on to become President of

“In conventional lending, margins

foundation, and that begins with

Skyline Home Loans, he brought

are paper-thin,” said Tessar. “And

seasoned leaders. Bill Tessar and

originations to a new level. In his

you have to be exceptional in all

Merced

10 years at that company, Tessar

aspects of that business in order to

President of Operations, came into

took Skyline, a retail mortgage

be successful. So, the way I thought

the organization and sat back to

company, and built it into a multi-

about the private lending space when

observe, listen, and learn for the first

channel

I made the decision to come over in

90 days. It was important that they

2017 was that if we applied some

fully understand the lay of the land

originator

funding

$3.5

billion annually.

Cohen,

Bill Tessar delivering his monthly State of the Union address to the CIVIC team

(Left to right) Kevin Victoria, Sales Manager; Jack Helfrich, SVP, Retail Lending; Bill Tessar

Executive

Vice

CIVIC is heavily invested in their people and they all live and work by a customer-for-life approach. The company has received several awards for being one of the best places to work in the financial industry — the byproduct of their philosophy that the happiness of their employees transpires into the happiness of their clients. and identify opportunities to add to

CIVIC vets and hires not just hard

these values are not just empty

the potential of an already strong

workers, but smart workers - and

phrases. They are words to live by

entrepreneurial culture, rather than

CIVIC is “chips all in” (as Tessar

– simple reminders, remnant of the

bulldoze it and start anew.

says) with their smart workers. The

North Star, to guide team members

company has 20 full time employees

through choices they may be facing.

observation

in People and Culture alone, whose

The challenge that put not only the

period, they built upon that strong

sole responsibility is to nurture and

company but the whole world to

foundation, and transformed CIVIC

improve the health, morale, and

the test was the pandemic. “When

into the company it was always meant

well-being of their employees.

COVID-19 hit, the financial markets

After

the

90-day

fell flat,” said Tessar. “There were

to be. They accomplished this through a focus on platform infrastructure,

In 2017, CIVIC had a total of 30

margin calls, paper was devalued,

new technology, digital branding,

employees. Today, they have more

and meeting with clients came to a

reputation management, social media

than 400. This growth is a testament

halt. But one glance at that coin and

and most importantly, bringing in

not

quality individuals.

leadership,

only

values

and

Tessar’s

but

innovative

CIVIC’s

core

overall

culture

that

The Importance of Core Values

has empowered the company to

On that note, CIVIC is heavily

thrive. CIVIC is people-first, and

invested in their people and they all

this is emblemized by the coins

live and work by a customer-for-life

that each employee carries on their

approach. The company has received

person. Much like a challenge coin,

several awards for being one of the

which

best places to work in the financial

the military to prove membership

industry — the byproduct of their

when “challenged” and to enhance

philosophy that the happiness of

a unit’s morale, the CIVIC coin is

their employees transpires into the

used to symbolize esprit de corp and

happiness of their clients. What

adoption of the company’s five core

many lenders call “transactions”,

values: act with honor, be a great

CIVIC calls “relationships”. To ensure

partner, communicate clearly, create

a servant attitude is delivered to all

smiles, and simplify.

of their clients and partnerships,

While

was

they

historically

may

sound

used

simple,

the CIVIC team knew that they would make it out on the other side; a reminder that there have been fires, earthquakes, wars and the financial crisis over the last 30 years. Just think, right foot left foot, and keep going. No matter what, don’t stop moving forward, just keep looking down the road.” Unparalleled Growth The last 18 months have amounted to the most challenging time of Tessar’s career. Acting with honor, being a great partner, communicating clearly, creating

smiles,

and

simplifying

seemed out of grasp in the face of a Civic Financial: Continues on pg. 10

December 2021 Originate Report 9

Civic Financial: Continued from pg. 9

global pandemic, but again served as the basic guide. COVID-19 took CIVIC out of their comfort zone in the best possible way: they doubled down on marketing and customer experience, they

connected

with

customers

virtually, and People and Culture adapted faster and better than ever imagined. The result of their efforts was the funding of more than $1 billion during a pandemic shut down that caused other private lenders to pause operations or exit the market altogether. CIVIC became an unstoppable force, the waves of which were noticed by Pacific Western Bank, who made the previously unheard-of decision to acquire the company. “When COVID hit and Wall Street froze, the first company to step back (Left to right) Eddie Wilson, CEO, AAPL and ThinkRealty; Bill Tessar

up and to continue purchasing loans uninterrupted was Pacific Western Bank,” said Tessar. “They saw the

since the acquisition. The reduction

its employees as well, through their

quantity of loans that we were doing,

allowed

impeccable care and remarkable

the quality of the loans in terms of

CIVIC to continue to invest in its

values. They take care of their people.

how they were performing, and the

infrastructure, invest in its people,

consistency that we were doing this

and reduce its interest rates… three

month after month after month. And

times in 2021, to be exact. The ability

so, it was really accretive to what

to sharpen pricing across the board

their short- and long-term corporate

while dropping a greater profit to

objectives were - and we ended up

the bottom line is positioning CIVIC

working out that acquisition over

to dominate the market more fiercely

about eight months.”

than ever before.

CIVIC is a wholly owned subsidiary,

Through a pandemic, exponential

growth,

every single employee, and in fact

continues

have added more than 50 people

empowers not only its investors, but

cost

and to

capital

has

acquisition, be

lender

“Whether you’re an experienced investor, first-time borrower, or in search of the best fit for your clients,” noted Tessar, “CIVIC is there as your trusted capital partner for your real estate financing needs.”

CIVIC that

For More Information: https://www.civicfs.com/

OUR MONEY’S ON YOU®

Our specialty is helping mortgage brokers, realtors, and investors purchase or refinance non-owner occupied residential properties. So if you’re looking for a trusted capital partner that offers streamlined services, quick closings, and aggressive rates, you’re in the right place.

YOUR TRUSTED LENDING PARTNER ©2021 CIVIC Financial Services, LLC. All Rights Reserved. This is not a commitment to lend. All offers of credit are subject to approval. Restrictions may apply. CIVIC Financial Services, LLC reserves the right to amend rates and guidelines. NMLS ID 1099109. Loans made or arranged pursuant to a California Finance Lenders Law License 603L321. AZ Mortgage Broker License 0928633. OR Mortgage Lending License ML-5282. CIVIC Financial Services, LLC is an Equal Housing Lender. See www.civicfs.com/Licensing.

(877) 472-4842 www.civicfs.com

December 2021 Originate Report 11

CONTRIBUTED ARTICLE

YEAR IN REVIEW

The Highs and Lows of 2021 By Lucas Sambrook, Esq., Roc Capital

s the world approaches

highs,

nearly two years of a global

new-fangled opportunities.

pandemic

that

unprecedented

levels

and

uprooted

modern society, reshaped the way

2020 Market Drivers

things were thought about, and

Before delving into 2021 and the

created ripples in the market that impacted just about everything we thought we knew, we are forced to continue to come to terms with this new “normal” and how to “make it work”. While nearly all facets of life and business were impacted, the real estate market, in particular, has experienced uncharacteristic shock

trends that accompanied the real estate market, the stage that was set by the preceding year, 2020, must be noted. 2020 will be remembered as a year of extremes, with an acceleration of certain trends that benefited some sectors, while punishing others at the hands of a global pandemic that was incredulous to say the least. The

The

United

States

GDP

quickly

rebounded, the market rallied back dramatically, and people began to rethink their relocation endeavors. Within this tumultuous time period, 2020 ended up being a record-setting year for home sales in the United States, setting the stage for a 2021 to expectedly follow suit. The United States housing market increased by trillions of dollars and progressively strong demand led to immense competition amongst buyers, with

market immediately plummeted, the

homes flying off the market at

United States Gross Domestic Product

record prices. Notably, this was all

(“GDP”) declined by an atrocious

in a market where housing demand

percentage and people flocked to

was already strong, with Millennials

and its foreseeable future appeared

the suburbs to avail themselves of

aging into prime first-time home

grim, what suddenly followed was a

space, distance and safety. This was

buying years, coupled with competitive

drastic rebound filled with historical

short-lived.

interest rates on mortgages.

waves as a result of it, with trends that very few could have predicted. Though the initial forecast of 2020

Current Trends 2021 has seen this trend continue forcefully, with homeowners reaping the benefits of the equity tied to their respective properties, coupled with eager homebuyers on the hunt for deals in appealing neighborhoods across the country. While economic hardship was certainly prevalent and

far-reaching,

sweeping

opportunities also came into the fold. Property owners, seeing the dramatic increase in the value of their properties coupled with low interest rates, were able to reap the benefits of refinancing into lower rates or cashing out on the equity tied to their property. Additionally, desirable surrounding

with

many

neighborhoods, urban

new often

metropolitan

areas, becoming more appealing to homebuyers, house flippers flocked to purchase properties, rehab and ultimately sell them, all in a short window, for large profits. Sound Wall Street backed capital providers, identifying

the

market

trends,

found themselves in a very suitable position to act as the conduit to feed this need and provide financing across the country. Roc - Moving Forward, Looking Back Roc Capital (“Roc”), a vertically integrated

financial

services

platform for real estate investors, already well versed in the space and recognizing this heightened need, reaped the benefits of its investments in 2020, setting the

Year in Review: Continues on pg. 14

December 2021 Originate Report 13

increase,

Year in Review: Continued from pg. 13

stage for an above-budget 2021. Roc invested heavily in departments such as technology, marketing and originations,

doubling

its

head

count in the midst of a pandemic. Maintaining

commitment

its clients, Roc continued to lend and provide liquidity, while most stopped,

bolstering

substantially.

Roc

originations focused

increasing the availability of new products, at desirable terms, to lenders,

originators,

investors,

developers, landlords and the like. Coupled with streamlined processes and a heightened focus on technology, Roc saw a significant uptick in origination

volumes,

investors

neighborhoods

identified

throughout

the lifting of foreclosure and eviction

the

moratoriums across many counties

country that appealed to prospective

and states, likely leading to a drive

homebuyers, all during a time where

of inventory back up again.

moratoriums and government-backed mandates plagued many counties and

Roc Capital, having funded over

states, thwarting otherwise frequent

$4 billion in residential real estate

sourcing channels like foreclosure

investor

loans

since

2014,

auctions and bank-owned Real Estate

positionally prepared to continue

Owned (“REO”) sales. Roc continues

offering a multitude of real estate

to be a leading capital provider to

services, including financing through

private

lenders,

“white

its Roc arm, title insurance through

labeled”

table

solutions

Wimba Title and property insurance

offering funding

that allow lenders of all sizes to

through

focus on originating and scaling

vertically integrated one-stop-shop

their portfolio, all while protecting

destination for real estate investors

their brand with a dedicated team

for what appears to be a prolific 2022.

relationship

managers,

legal

Elmsure,

providing

personnel and underwriting support

About the Author

to assist every step of the way.

Lucas Sambrook is a Director and

including

Real Estate Counsel of Roc Capital,

dramatic increases in the 30-year

While

term product, offering financing

soar, eclipsing previous 12-month

firm's closing and special servicing

on single property rentals, rental

historical price jumps, the market

departments.

portfolios,

mixed

appears to be slowing down, with

Sambrook was an attorney at a

properties.

price growth beginning to wane

Manhattan real estate law firm,

Borrowers were able to seamlessly

and normalize. While that seems

representing

refinance their properties into lower

to be the anticipated trajectory,

rates, extrapolate cash from the

lenders on various financing-related

the housing market still continues

increased equity in their properties

to move upward, albeit at a slower

matters. Lucas Sambrook holds a J.D.

and enter into a secure, long-term

place, with expectations for this to

loan. Additionally, Roc facilitated

continue into 2022.

use

and

multi-family, ground

2021

saw

home

prices

Extensions

and

While

remains

aggressively high inflation has likely

in New York, that allowed borrowers

increased the odds that the Federal

to significantly save on mortgage

Reserve will raise interest rates,

recording

and thus mortgage rates, sooner

making

these

products even the more appealing. Furthermore, fix and flip loans,

prices. Additionally, 2022 appears

otherwise known as “construction

in line to see the end of mortgage

loans”,

forbearance protections as well as

saw

their

volumes

Previously,

large

the Mr.

institutional

from New York Law School and an Honors Bachelor’s Degree from the

than later, which will presumably put downward pressure on home

also

overseeing

seen,

Modification Agreements (“CEMA”)

taxes,

for

University of Toronto.

cash-saving mechanisms, such as Consolidations,

responsible

Lucas Sambrook, Esq. Attorney Roc Capital https://www.roc360.com/

UPCOMING ISSUES 2022 MONTH

THEME

CONTENTS & AD DEADLINE

February 2022

Multifamily Lending - SOLD

January 10

April 2022

Innovate Special Edition – Focus on Innovative Companies, People, and Ideas*

March 4

June 2022

3rd Annual Women in Real Estate Edition - SOLD

May 6

August 2022

Captivate Special Edition – Focus on Deal Flow and Capital-Raising*

July 8

October 2022

AAPL Special Edition – Focus on CRE*

September 9

December 2022

Year in Review – Highs and Lows of 2022

November 5

Themes are subject to change. *Conference-Specific Issues. The AAPL Special Edition will be included in tote bags at the event.

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CONTRIBUTED ARTICLE

How Fiduciaries Should Approach the Crime of Wire Fraud (ELECTRONIC FUND TRANSFERS) By Ryan Castle and David Adams, Conduit Security

und managers, real estate

is very specific and focuses on

themselves at the right moment

developers, and companies

social

using effective confidence tricks, to

with investors are all acting

basic, it can be summarized as fake

as fiduciaries for their investor’s

invoice fraud delivered with social

capital and have a duty to preserve trust

and

protect

their

clients'

interests. Wire Fraud is a direct and underappreciated threat to this duty, especially considering the financial and reputational damage associated with the crime. Wire

fraud

engineering.

engineering tactics.

its

most

steal your money.

The attacks

One of the most important steps in

range in sophistication from very

protecting yourself is to acknowledge

basic phishing and spoofing attacks

that any recourse and recovery is

cases

unlikely, making the only solution

including business email compromise,

to work diligently on solving the

ported

wire fraud problem pre-loss.

much

cell

advanced

phones

and

deep

The

good news is there are existing best

fake authorizations.

practices that protect your investors, laws

are

rather

expansive, and are similar to those

The attack tends to take advantage

their capital, and your business from

of how busy the targets are, often

this crime.

relying on the fact that wire security

of mail fraud, except with the use

is an overlooked aspect of any deal,

The Problem

of electronic communications. The

and few organizations have concrete

Nearly $2 Billion was stolen last

crime, however, that targets fund

controls in place. With deadlines

year

managers and real estate operators

looming,

Conduit Security’s CEO, Ryan Castle,

the

bad

guys

insert

wire

fraud,

however,

estimates the actual number is

good now, they know how to pull

and your limits. Specifically ask if

double that.

Why? The crime is

the right levers to get your team

your policy has a social engineering

under-reported as firms realize they

to act. It has evolved well beyond

clause

are solely responsible for the loss

phishing or spoofing.

limitations for wire transfer fraud.

and look to contain the damage the

happens every day to fastidious

crime creates.

professionals at organizations with

2) If you use a 3rd party accountant

large cybersecurity budgets and

or administrator, have a serious

“Many companies make the logical

works regularly across the spectrum

conversation and contract review

decision to absorb the loss out of

of industries and company sizes.

with them around liability as it

earnings once they realize they have

With an increase in distributed

pertains to wire fraud.

no recourse. The rule of thumb is

teams and working from home, it is

are

whoever sends the wire has the

only going to get worse.”

responsibilities when it comes to

says Castle. “Surprisingly, this even

Review of Best Practices

a lost wire? When are they and when

extends to organizations who use

1) Review your Cyber and Crime

3rd partly accountants.

Liability

Insurance Policies with your broker.

rests with the general partner or

You need to have a crystal-clear

fund manager. The criminals are so

understanding of your protections

This crime

liability, regardless of other factors.”

and

their

any

restrictions

expectations

What and

verifying instructions or recovering are they not covering any losses? We have experienced a lack of alignment among fund managers and their Electronic Fund Transfers: Continues on pg. 18

December 2021 Originate Report 17

Electronic Fund Transfers: Continued from pg. 17

outsourced accounting teams on this issue.

ONE OF THE MOST IMPORTANT

3) Train your employees on the crime.

This is markedly different

than standard phishing and security awareness

training.

they

understand the mechanics of the crime and how it works? Have they seen real world examples that have “worked” in the wild? 4) Have a written policy in place that covers the process, roles, and responsibilities for all stages of electronic funds transfers. Explicitly

STEPS IN PROTECTING YOURSELF IS TO ACKNOWLEDGE THAT ANY RECOURSE AND RECOVERY IS UNLIKELY, MAKING THE ONLY SOLUTION TO WORK DILIGENTLY ON SOLVING THE WIRE FRAUD PROBLEM PRE-LOSS.

define what validations must be met for a transfer and the decision tree of why and when verification phone calls are made with recipients, teammates, and your bankers.

Furthermore, can you unequivocally 5) Turn on and optimize the existing protections that your bank provides. This is important, but keep in mind that banking protections are better suited

solving

embezzlement

issues than wire fraud attempts. In the crime of wire fraud, the victim organization always intends to send the funds, and that is a difficult problem for any bank to solve.

prove you took the necessary steps and made the appropriate verification calls to that counterparty to a judge? If you can’t do these things, you are at risk. Wire Fraud exists because companies, leadership and teammates are busy. The stakes are high, the crime is not well understood, and the bad guys

Ultimately the question that must be asked and answered internally is

exploit this with both regular and astounding success.

If you would

would the system you currently have

like help in training, auditing your

in place stop an attack, every time?

team, or putting a written processes

Think of your busiest employee,

in place, please contact us at info@

on her most hectic day, receiving

conduitsecurity.com.

convincing

invoice

from

the

actual email of your counterparty.

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• Codified best practices & procedures • Transparency, accountability, & repeatability • Smart risk intelligence December 2021 Originate Report 19

FEATURED ARTICLE

INVIGOR ATE FINANCE I

nvigorate

Finance

proof

positive that market volatility can breed enhanced innovation.

As the global economy first began

Optimization Via Collaboration

to shift last March with the onset

By Mark Dewyea, Contributing Writer for Originate Report

in the mortgage sector. Originate

Coronavirus,

two

industry

professionals with nearly a halfcentury

collective

experience

identified a prime opportunity to partner to address an emerging gap Report had the pleasure of speaking with Invigorate Finance President Jennifer McGuinness to learn more

about her key takeaways from the past year, how those insights led to a

If there’s one thing that the past year

strategic partnership with Ed Fay of

taught us, it’s that change is a constant.

Fay Financial, and what trends she anticipates in the near future.

Anticipating these changes and being

McGuinness brings over twentyfive

years

experience

lending and aggregation, banking, asset

management,

securitization,

adequately prepared to adjust and leverage the resulting market opportunities is at the

servicing,

and

core of McGuinness’ business approach.

structured

finance to Invigorate Finance. Most recently, she was the Founder and

assessment phases—both of which

Head of Aggregation & Structured

for lenders to build meaningful and

are critical in terms of long-term

Finance for both Mortgage Venture

productive relationships with us

successful

Invigorate

Partners

(“MVP”)

and

where both parties are mutually

Finance is a closed loan mortgage

Venture

Partners

(“SVP”),

invested in long-term sustainability.

conduit

Strategic both

outcomes.”

specializing

FinTech

Additionally, this also saves the

in the development of innovative

Innovators. Prior to MVP and SVP,

lender a lot of time and headaches,

and enhanced lending programs

McGuinness held senior or executive

as they get answers directly from us.

and

roles at Colony American Finance

of both residential and business

No more chasing down third parties

n/k/a CoreVest Finance, Deutsche

purpose loans.

named

2020

Top

the

aggregator

productive

aggregation

may decide they do not like later. It’s

Bank, and WinWater Home Mortgage amongst others.

With a focus on delivering solutions to

both

lenders

and

investors

Forging Productive Relationships

through innovative products and

The initial step in optimizing any

efficient processes, thus resulting in

process is identifying inefficiencies.

mitigating risk while streamlining

With

and

the origination, asset management,

extensive career in the industry, that

and servicing processes from a

spans the full lifecycle of mortgages,

client-centered approach, Invigorate

McGuinness was able to do just that,

Finance

pinpointing

aggregation business.

truly

diversified

major issues in the

revolutionizing

the

aggregation space. “The majority of aggregation or mortgage investment

McGuinness notes that “Invigorate is

businesses typically outsource key

a business, not a trade”, and delivers

components of the business, resulting

a premium lender and investor

in a general lack of consistency

partner experience. “We do not

when it comes to implementing

outsource operational features like

standards

which

credit. This allows Invigorate to truly

is significant as it can impact the

understand the loans that we are

efficacy of the underwriting and

acquiring and creates opportunities

and

practices,

to get an answer that the investor time for lenders to be able to grow their business with a partner that truly understands what they do,” explains McGuinness. “This aspect of our business model— and the rapport it allows us to build with our partners is key to our relationships historically and has become even more important amidst the ongoing uncertainty associated with the pandemic.” Facilitating Positive Market Growth After a truly unprecedented year packed with notable challenges and continued uncertainty, McGuinness understands

the

importance

Invigorate Finance: Continues on pg. 30

December 2021 Originate Report 29

Invigorate Finance: Continued from pg. 29

keeping close tabs on emerging market trends as a tool to inform business

decisions

Invigorate

Finance. One of the issues she has noted over the past year is the growing disparity between housing demand and supply levels in certain asset classes. “The

overlapping

demand

homebuyers and institutional investors has collectively fueled an exponential growth

combined

home with

prices,

which,

historically

low

interest rates, has enabled potential buyers to submit better offers. At times, it has created a situation where investors are competing with homeowners for the same properties due to the amount of capital that has been raised to, for example, purchase homes to be converted into rentals,” explains McGuinness.

construction lines of credit. Building new homes will help equalize this lack of supply, which is essential for market sustainability and as we continue to recover from the COVID-19 industry-wide setback.” Additionally, this same trend has equity

extremely important. A First Lien

you need both to tap into the utility

HELOC with a single digit interest

offered by modernization. Which

rate is a much better solution

is why we ensure our tech-forward

then running up your 27%+ credit

approach is optimally supplemented

cards, it’s the answer to allowing

with deep industry knowledge that

homeowners and investors to benefit

allows us to deliver the best products

from their equity when they want

and process possible to our clients.

and/or need to, without becoming

It also allows us to see trends others

over-levered or being overcharged.”

may not see and save our partners time and money.”

“Invigorate Finance offers ground up

increased

Jennifer McGuinness, President, Invigorate Finance

homes

for

those not looking to sell. Invigorate

Growth Mindset If there’s one thing that the past

Invigorate Finance is in a position

year taught us, it’s that change is a

of strength and growing. Its strategic

constant. Anticipating these changes

alignment

and being adequately prepared to

strengthens its offering by having

adjust and leverage the resulting

access to other real estate lifecycle

market opportunities is at the core

companies, such as a top five special

of McGuinness’ business approach.

servicer with Fay Servicing, amongst

One of her focuses is technology.

other sister companies which when

with

Fay

Financial

combined, brings their partners and

Finance offers first lien home equity

“Technology is becoming an increasingly

lines of credit (“First Lien HELOC”).

relevant aspect of not just the lending

clients solutions and efficiency not often found in the industry.

industry but the entire economy— “The pandemic taught us that having

but it has to be leveraged correctly,”

access to capital is important in

says McGuinness. “You can’t have all

times of uncertainty or need, it also

the tech and no understanding of the

taught us that cash management is

industry dynamics or vice versa—

For More Information: https://www.invigoratefinance.com/

SE E R P LLP I C A ER

NTS

TWO N O S SEA

The Podcast that Looks Behind the Curtain of the Private Lending Industry CATCH US ON THE 2ND AND 4TH MONDAYS OF EVERY MONTH

https://geracilawfirm.com/lender-lounge/ December 2021 Originate Report 31

CONTRIBUTED ARTICLE

More Investing Opportunities WILL EMERGE AS THE HOUSING MARKET MOVES TOWARD EQUILIBRIUM IN

2022 By Daren Blomquist, Auction.com

alue-add real estate investing

Data from the National Association

third quarter of 2021 was 68 percent

opportunities

been

of Realtors shows the annual pace

below the pre-pandemic level in

harder to come by — although

of existing home sales averaging

still quite profitable — during the

6.1 million through the first nine

Q3 2019. That 68 percent drop in

pandemic, but the expiration of the

months of 2021, compared to 5.3

nationwide foreclosure and eviction

million through the first nine months

moratoriums in late 2021 should help

of 2019.

have

bring a modicum of balance back to the housing market and provide more acquisition opportunities for real estate investors in 2022.

meet

buyer

demand

became

a common theme in the broader housing

market

The supply-demand imbalance is much more severe in the distressed

Lack of sufficient housing inventory to

Dearth of Distress

during

the

pandemic. Although that theme is validated in the double-digit home price appreciation that has become

market, where many real estate investors turn to find the best valueadd deals that don’t require rapid home price appreciation to generate a healthy return.

auction

inventory

coming off an already low level. Total foreclosure auction volume in 2019 was at its lowest level since 2006 according to public record data from ATTOM Data Solutions. The more severe supply-demand imbalance in the distressed market is also evident in an average foreclosure sales price that is rising at an even faster pace than the overall market. Properties purchased at foreclosure

Data from the Auction.com marketplace

commonplace during the pandemic,

— which has accounted for close to

there has still been enough inventory

50 percent of all U.S. foreclosure

to fuel a 22 percent increase in the

auction sales during the pandemic

annual pace of existing home sales in

— shows the number of properties

2021 compared to pre-pandemic levels.

brought to foreclosure auction in the

foreclosure

auction in the third quarter of 2021 sold for an average price of $167,503, up 15 percent from the previous quarter and up 42 percent from a year ago, according to the Auction.com data.1

Foreclosure Auction Prices Up 42 Percent From Year Ago

Investing Opportunities: Continues on pg. 34

December 2021 Originate Report 33

Investing Opportunities: Continued from pg. 33 2

Q3 2021 Foreclosure Auction Trends

Rising Tide of Distress

Buying Low

during the pandemic for $280,000.

The good news for real estate

Despite skyrocketing home sales

Starnes said he has spent $170,000

investors struggling to find value-

prices, foreclosure auction buyers

on renovating the property. “It was

add

foreclosure

are still purchasing well below

in a lot of need for some love. It

auction tide is slowly starting to

“after-repair” market value, allowing

needed $170,000 worth of love.”

rise. Although still well below pre-

them to earn rental or resale returns

pandemic levels, the volume of

through

renovations.

The significant time and cost spent on

foreclosure auctions on the Auction.

Properties sold at foreclosure auction

renovations allows Starnes to resell

com platform in Q3 2021 increased

were purchased at 32 percent below

renovated foreclosures at close to full

16 percent from the previous quarter

the estimated after-repair market

market value. That helps him helps

and was up 89 percent from the

value in the third quarter, according

to achieve his target returns and also

third quarter of 2020 to the highest

to the Auction.com data.

helps to improve home values in the

inventory:

the

value-add

surrounding neighborhoods where

quarterly level since the onset of the pandemic.

That means real estate investors

he buys. In the second quarter of

who

find

2021, renovated foreclosures resold

The tide is rising more quickly in

distressed property deals during

for 104 percent of estimated after-

the pandemic are still capable of

repair market value – an average

realizing healthy profits that are

37 percentage point lift in value

grounded in value added through

from the distressed purchase price,

substantial renovation rather being

according to an analysis of Auction.

heavily reliant on unpredictable

com data and public record data

home price appreciation.

from ATTOM Data Solutions.

“I’m still getting my 20 percent

Well-renovated homes also attract

gross margin,” said Rick Starnes of

owner-occupant buyers: 71 percent

a distressed property he purchased

of renovated homes purchased at

some markets than others. States with volume

third

quarter

rising

foreclosure

closest

pre-

pandemic levels included Oklahoma (3

percent

below

pre-pandemic

levels), Indiana (22 percent below), Kansas (37 percent below), Michigan (40 percent below), and Mississippi (54 percent below).2

have

been

able

foreclosure auction in 2019 and 2020

on the Auction.com platform shows

were resold to owner-occupants,

that Starnes’ gross margin goal is

according to the analysis.

neither unrealistic nor uncommon. The analysis, which looked at more

By contrast, homes that did not sell

than 65,000 resales of previously

to local buyers like Starnes at the

distressed

foreclosure

instead

and the second quarter of 2021,

reverted to the foreclosing lender

shows average returns for renovated

as real estate owned (REO), were

foreclosures rising — even during

subsequently resold in Q2 2021 on the

the pandemic.

auction,

but

homes

between

2018

traditional retail market (Multiple Listing Service) for 87 percent of

The rising returns for distressed

estimated after-repair market value.

property renovators is counter to

Only 49 percent of all traditional

the trend in the larger retail market,

REO sales between 2019 and 2020

where the average gross flipping

went to owner-occupant buyers.

profit decreased to a 10-year low in the second quarter of 2021,

Distressed Deals

according to ATTOM Data Solutions.

Since he started investing in 2018,

The retail market data includes

Starnes has purchased five distressed

properties resold by iBuyers such

properties, four of them on Auction.

as Opendoor, Offerpad and Zillow,

com and three of them during

the latter of which exited the home

the pandemic. All the homes are

flipping business in November due to

within driving distance of Starnes’

the “unpredictability of forecasting

Chesterfield, Virginia, home, and

home prices.”3

all thus far have produced the gross margin goal he has set for himself.

Renovation Required Most Auction.com buyers budget at

An analysis of properties renovated

least 20 percent of the acquisition

and resold after being purchased

costs for rehab and holding costs,

Rising Returns on Renovated Foreclosures

according to a 2021 buyer survey. Many, like Starnes, spend much more on renovations. “You’re wasting your time if you’re not doing a good job and expecting to get top dollar for the house,” Starnes said, noting that his contractors tell him other investors don’t spend as much as he does on rehabbing homes. “The last two I’ve completely gutted the houses. When I walk away from them, I want them to think they are buying a new house. I’m an engineer and I don’t want to do it halfway.” About the Author Daren Blomquist is vice president of market economics at Auction.com. In this role, Blomquist analyzes and forecasts complex macro and microeconomic data trends within the marketplace and industry to provide value to both buyers and sellers using the Auction.com platform. Daren’s reports and analysis have been cited by thousands of media outlets — including all the major news networks and leading publications such as The Wall Street Journal, The New York Times and USA TODAY. Daren has been quoted in hundreds of publications and has appeared on many national network broadcasts, including CBS, ABC, CNN, CNBC, FOX Business and Bloomberg.

Daren Blomquist_ Vice President of Market Economics Auction.com https://www.auction.com/

December 2021 Originate Report 35

INDUSTRY NEWS

PRESS RELEASE

Arixa Capital Surpasses $2 Billion in Origination Volume LOS ANGELES, /PRNewswire/ - Arixa Capital is pleased to announce that the Company has now reached $2 billion in cumulative loan origination since inception of its first lending fund in 2010. Arixa Capital has now funded more than $2 billion of loans to real estate investors and developers since 2010. Arixa has funded more than 2,000 loans across 12 states to real estate investors and developers, with the majority of the Company's loans originated in the largest West Coast metro areas. The Company provides several customized loan programs to borrowers to ensure they have the debt capital to acquire, renovate, and build their projects. Arixa lends on residential projects such as single-family homes, infill construction and sub-divisions, as well as multi-family and mixeduse projects. The Company's loans range from $500,000 up to $15 million with typical loan maturities of 6 to 24 months. Jan Brzeski, Arixa's Managing Director and Chief Investment Officer, said, "The key to Arixa's growth has been our focus on white glove service to our borrowers. We're able to provide certainty of execution because of our track record with investors. Arixa has maintained a nimble approach because of our discretionary capital from investors who value the steady income produced by Arixa's loan portfolios." Arixa operates one of the industry's largest vertically integrated lending platforms, providing a seamless and consistent borrower experience across all aspects of the lending process from originations and underwriting to closing, construction draws and servicing. Greg Hebner, Arixa's Managing Director, added, "We have built our lending platform from the ground up to provide a truly differentiated experience for the exceptional group of borrowers that we have been honored to work with. We are driven to exceed our borrowers' expectations and we look forward to growing our market presence and origination volume as we serve our current and future borrowers." About the Company Arixa Capital is one of the West Coast's premier private real estate lenders and fund managers providing small balance loan solutions to lower middle-market residential and commercial investors and developers.

For More Information, Contact: info@arixacapital.com (310) 905-3050 | https://www.arixacapital.com/ December 2021 Originate Report 37

PRESS RELEASE

ABS Announces Integration with Lightning DocsTM, Geraci LLP’s National Loan Document Solution LONG BEACH, Calif., November 11, 2021 - Applied Business SoftwareTM (“ABS”), makers of The Mortgage Office®, leader in loan servicing and fund management software, announced today the launch of an integration with Lightning DocsTM, a proprietary cloud based national loan document generation system, developed by Geraci LLP, the nationwide leader in business purpose loan documents for the private lending industry. Nema Daghbandan, Esq., Partner with Geraci LLP stated: “The Mortgage Office® is a well-known and respected leader in the loan origination software space. Their 40+ year track record speaks for itself. We are honored they have chosen to partner with Geraci LLP to integrate with our Lightning DocsTM loan document generation system and we look forward to providing our mutual clients the most advanced technology in the private lending space allowing lenders to originate loans nationwide with peace of mind”. Carlos Nodarse, CEO of Applied Business Software stated: “We are thrilled about this integration with Lighting DocsTM by Geraci LLP. We have had a long-standing relationship and a mutual respect throughout the years”. He added: “This development is consistent with our vision of integrations, and the continued pursuit to provide our customers tools that simplify, enhance, and automate their entire lending operation”. About Applied Business Software Applied Business Software is a market leader and global provider of software systems and solutions to the lending industry. ABS offers a complete suite of software products designed from the ground up to specifically address the needs of those who originate and service loans. All our products are consistently rated superior in design, system interface, expandability, and ease of use. ABS is based in Long Beach, California. For additional information about ABS’s products and services, visit www.themortgageoffice.com or call (800) 833-3343. About Lightning DocsTM: Lightning DocsTM is a proprietary cloud-based loan document generation system developed in-house by the attorneys and partners at Geraci LLP. Lightning Docs permits its clients to generate business purpose loan documents nationwide at the click of a button. The system will generate any business purpose loan documents including bridge, fix and flip, ground up construction, DSCR rental, portfolio rental, etc. The documents have been used for numerous rated and unrated securitizations and are considered the industry standard for the private lending industry. For more information about Lightning Docs please contact nema@geracillp.com or 949-379-2600.

For More Information, Contact: Elizabeth Morales, Chief Marketing Officer elizabeth@absnetwork.com | (800) 833-3343 | https://www.themortgageoffice.com/

PRESS RELEASE

Pretium Acquires Anchor Loans to Deliver Enhanced Capital Solutions for Homebuyers Furthers Pretium's Mission to Provide Solutions for U.S. Housing Market Through Diversified Platform Meets Growing Residential Real Estate Needs by Providing Loans to Upgrade Aging Homes Positions Anchor to Drive Innovation and Enhance Service Capabilities

NEW YORK, Nov. 2, 2021 /PRNewswire/ - Pretium, a specialized investment management firm with approximately$30 billion in assets, today announced that it has acquired Anchor Loans LP, the nation's leading provider of financing to residential real estate investors and entrepreneurs, from affiliates of Wafra Capital Partners Inc. and other owners. Terms of the transaction were not disclosed. Founded in 1998, Anchor Loans was the first institutional lending platform built to serve the diverse financing needs of professional residential real-estate investors. Over the last two decades, Anchor Loans has grown to become the nation's leading capital provider to experienced residential real-estate sponsors through its bridge and construction products. Anchor Loans serves a professional customer base where 95% of loans are made to established borrowers who have completed more than 40 projects. To date, Anchor Loans has originated more than $10 billion in loans – more than any other lender of its type. "As we continue to experience a dynamic housing market defined by a growing shortage of total housing supply and an insufficient stock of move-in ready homes, we are seeing a significant increase in the investments required to upgrade today's aging homes and modernize our infrastructure," said Don Mullen, CEO and Founder of Pretium. "Pretium was formed with the goal to solve the shortage of housing in the U.S. and, today, is contributing to our local communities by creating attractive rental homes, offering capital solutions to homebuyers, and now providing loans for residential realestate investors and entrepreneurs. Andrew Pollock and the Anchor Loans team are leaders in this industry, and we look More Information, Contact: forward to partnering with them to continueFor providing private capital solutions to the U.S. housing market."

info@arixacapital.com | (310) 905-3050 | https://www.arixacapital.com/

Pretium Acquires Anchor Loans: Continues on pg. 40

December 2021 Originate Report 39

Pretium Acquires Anchor Loans: Continued from pg. 39

"This transaction is a unique opportunity to partner with an organization that shares our passion about the importance of supporting our communities with great homes and investments," said Andrew Pollock, Chief Executive Officer at Anchor Loans. "With Pretium's resources, operational expertise, and complementary businesses, we see immediate opportunities for cross collaboration that will naturally accelerate our growth and strengthen the services we provide to our clients. At the same time, we remain well positioned to drive innovation in our lending programs and position our pioneering business for continued long-term success." Following the close of the transaction, Anchor Loans will continue to be led by Chief Executive Officer Andrew Pollock and the current management team and retain its headquarters in Thousand Oaks, California. American Equity Investment Life Insurance Company provided financing for the acquisition as part of an expansion of its strategic partnership with Pretium. In addition, American Equity acquired approximately $1 billion of loans originated by Anchor Loans concurrent with closing. Nomura Securities International, Inc. acted as financial advisor and Sidley Austin LLP acted as legal advisor to Pretium. Piper Sandler & Co. acted as financial advisor and O'Melveny & Myers acted as legal advisor to Anchor Loans. About Pretium Pretium is a specialized alternative investment management firm focused on U.S. residential real estate, residential credit, and corporate credit. Pretium was founded in 2012 to capitalize on secular investment and lending opportunities arising as a result of structural changes, disruptions, and inefficiencies within the economy. Pretium has built an integrated analytical and operational ecosystem within the U.S. housing, residential credit, and corporate credit markets, and believes that its insight and experience within these markets create a strategic advantage over other investment managers. Pretium's platform has approximately $30 billion of assets under management as of October 31, 2021 and employs approximately 3,000 people across 30 offices. About Anchor Loans Anchor Loans is the nation's leading lender to residential real estate investors and entrepreneurs, with a total funding of more than $10 billion since 1998. With advanced, intuitive and innovative technology, Anchor provides fast, reliable funding and an exceptional customer experience—forging long-term client relationships and helping customers achieve and exceed their business goals. More than 85% of Anchor's borrowers are repeat customers, over 70% of the Company's new borrowers were referred by an existing customer, and approximately 95% of loans go to established borrowers who have completed more than 40 projects. Ranked for two consecutive years on the Inc. 5000 list of the fastest-growing privately held small companies in the U.S.

For More Information, Contact:

Pretium

Anchor Loans

Jon Keehner, Erik Carlson, Lyle Weston,

Bill Campbell

Joele Frank, Wilkinson Brimmer Katcher

Campbell Lewis Communications

Media-SFR@pretium.com | (212) 355-4449

bill@campbelllewis.com | (212) 995-8057

http://www.pretium.com

https://www.anchorloans.com.

PRESS RELEASE

Mortgage Automator Integrates with Lightning Docs™

A LOAN DOCUMENT GENERATION SYSTEM BY GERACI LLP Toronto, ON, 11/18/2021 - Mortgage Automator, complete loan origination and servicing software for private lenders, announced a new integration with Lightning Docs™, a proprietary cloud-based loan document generation system developed in-house by the attorneys and partners at Geraci LLP. After winning Innovator of the Year at the 2021 Private Lending Awards organized by Pitbull Conference and the 2021 Service Provider Member of the Year awarded by the American Association of Private Lenders, Mortgage Automator continues to bring innovative solutions to the private lending industry. This includes offering convenient and reliable ways for lenders to stay compliant while not compromising on the efficiency and quality of services they provide. “We are very excited to partner with Geraci LLP who share our vision and commitment to the digital progress in the private mortgage industry. This integration allows lenders to further optimize their operations while increasing their turnaround times and providing exceptional service to all parties involved,” said Joseph Fooks, Mortgage Automator Co-Founder. Nema Daghbandan, Esq., Partner with Geraci LLP, shares this excitement: “We are honored that Mortgage Automator chose to integrate with Lightning Docs™. This is one stepping stone on the way to full API integration with both systems. Mortgage Automator continues to obsess over the client experience and provide a cutting-edge user experience because of their hunger to provide the most modern technology available to the private lending world. We are excited to start this partnership with their team.” About Mortgage Automator Mortgage Automator is an advanced end-to-end loan origination & servicing software for private lenders. Perfect for residential, commercial and construction lending (rehab, fix & flips), in seconds, it auto-generates custom documents, compliance reports, ACH payments, and more. With customizable templates, products, user training, and support, Mortgage Automator enables private lending businesses to focus on growth. About Lightning DocsTM Lightning DocsTM is a proprietary cloud-based loan document generation system developed in-house by the attorneys and partners at Geraci LLP. Lightning Docs permits its clients to generate business purpose loan documents nationwide at the click of a button. The system will generate any business purpose loan documents including bridge, fix and flip, ground up construction, DSCR rental, portfolio rental, etc. The documents have been used for numerous rated and unrated securitizations and are considered the industry standard for the private lending industry. For more information about Lightning Docs please visit https://lightningdocs.com/ or contact nema@geracillp.com or 949-379-2600.

For More Information, Contact: Tatiana Caciur, Director of Marketing at Mortgage Automator tatiana@mortgageautomator.com | https://www.mortgageautomator.com/ December 2021 Originate Report 41

PRESS RELEASE

Roc360 Announces the Closing of its Inaugural Residential Bridge Loan Securitization NEW YORK--(BUSINESS WIRE) - Roc Capital Holdings LLC (“Roc360”) a vertically integrated digital platform for residential real estate and a leading originator of investor loans nationwide, is pleased to announce the closing of its inaugural syndicated revolving securitization of residential transitional loans. Roc360 sources its loans using a multichannel approach both through its network of private lenders for whom the company acts as the nation’s leading white-labeled capital provider, seamlessly providing its clients capital, technology, and leads, and through its data science driven direct to borrower subsidiary Haus Lending. Roc360 acted as sponsor and through its various wholly-owned subsidiaries, underwrote, originated, and table funded all of the initial mortgage loans included in the transaction. The Roc Mortgage Trust-2021-RTL1 securitization was structured with total offered notes of approximately $200.790 million across two classes of senior notes and one class of mezzanine notes. None of the offered notes will be rated by any rating agency. The securitization represents interest in a pool of performing, fixed-rate, interest-only, first lien mortgage loans to real estate investors, with eligible collateral encompassing transitional one-to-four-family residential, multifamily and mixeduse properties. The deal enjoyed strong demand and was oversubscribed with broad institutional participation, backed by strong origination capacity and the credit performance of the more than $4 billion in loans originated by Roc360 since 2014. Nomura Securities International, Inc. acted as sole lead structuring agent of the transaction. Morgan Stanley & Co. LLC served as joint bookrunner and co-lead manager on the transaction. This is the first securitization from Roc360, a data science driven PropTech lender headed by founder and Chief Executive Officer Arvind Raghunathan, PhD. and co-founded by Maksim Stavinsky, Chief Operating Officer, and Eric Abramovich, Chief Credit Officer. Roc360’s advisory board is led by Deven Sharma, formerly President of Standard & Poor’s. The securitization features a two-year revolving period during which principal collections on the underlying mortgage loans can be used to purchase additional loans and fund rehabilitation draws. Credit enhancement for the transaction includes subordination of the notes, overcollateralization and excess spread. The transaction represents the second committed capital facility that Roc360 has raised in as many months. About Roc360 Roc360 is an industry leading, vertically-integrated digital financial services platform and lender facilitating a broad range of residential real estate loans for professional investors. Founded in 2014, Roc360 employs over 250 people and has funded in excess of $4 billion in loans. The company is headquartered in New York City, with offices on four continents.

For More Information, Contact: https://www.roc360.com/ | https://www.roc360.com/careers NMLS ID # 1804080 42

PRESS RELEASE

RCN Capital Announces Executive Director of Retail Loan Development SOUTH WINDSOR, Conn. (November 29, 2021) - RCN Capital, a leading nationwide private lender specializing in providing financing for real estate investors, has announced that professional real estate investor and entrepreneur, Tim Herriage will be joining the company as its new Executive Director of Retail Loan Development. In his role at RCN Capital, Herriage will be responsible for overseeing initiatives to strengthen RCN Capital’s direct to investor lending presence and increase retail sales. Additionally, Herriage will work to expand awareness in this area by developing and executing strategic initiatives with the goal of growing the retail lending channel.

For two decades, Herriage has been on the leading edge of the Real Estate Investor space, with time spent as the Founder and Managing Director of Blackstone’s B2R Finance, the Founder of 2020 REI Group, the Founder of the REI Expo and as a Franchisee and Development for HomeVestors® of America. “I have known Tim for nearly a decade, and over that time I have watched Tim build some of the most iconic brands in the private lending industry,” said Jeffrey Tesch, CEO of RCN Capital. “In addition, Tim served our country admirably in our armed forces where he honed his tremendous leadership skills. The RCN Capital family could not be more proud to bring on an entrepreneur who embodies the RCN Capital culture and work ethic that has propelled our firm and its employees to the forefront of the private lending industry.” Herriage has also personally completed well over $1B in real estate investment transactions, including the acquisition of more than 2,000 houses in his twenty-year career, and will use his background and unique perspective of the space to jumpstart RCN’s organizational initiatives in 2022. About RCN Capital RCN Capital is a South Windsor, CT based national, direct, private lender. Established in 2010, RCN provides commercial loans for the purchase or refinance of non-owner occupied residential and commercial properties. The company specializes in new construction financing, short-term fix & flip and bridge financing and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.

For More Information, Contact: Erica LaCentra, Chief Marketing Officer elacentra@rcncapital.com | (860) 432-4782 | https://rcncapital.com/ December 2021 Originate Report 43

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Originate Report - December 2021

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