Civic Financial has frozen their pipeline! Where are you taking your deal now?

[Alex Bekeza]

Civic Financial has long been one of the most competitive names in the space and highly active on BP.  Unfortunately, they appear to be going through serious liquidity issues and have informed clients that their fundings are frozen for the next 1-2 months, they parted ways with their legendary CEO Bill Tessar on Friday (who had just been interviewed on the latest episode of "On the Market"), and if I had to guess it would appear they are fading out of the business.... 

I'm curious to hear from who is directly impacted by this in the BP community.  What are you all doing now that they have left you high and dry? 

[Robin Simon]

tried and true in this business - if the question is "how are they doing it" - the answer tends not to be that have a magic secret sauce, but that the business model was flawed.  80% Cash-Out Refinances throughout 2022 was always met with that question by at least me...now I guess we see the answer

[Jay Hinrichs]

Quote from @Robin Simon:

tried and true in this business - if the question is "how are they doing it" - the answer tends not to be that have a magic secret sauce, but that the business model was flawed.  80% Cash-Out Refinances throughout 2022 was always met with that question by at least me...now I guess we see the answer

could it be the interest rates on their guidance lines are so high with prime moving like it has that they simply cant get the spread they need to make sense to originate new loans.

[Issac San Miguel]

I just had someone bring me a loan request - 90% LTV with a 624 Fico that they had approval at Civic - why are they struggling? They wrote risky loans.

[Alex Bekeza]

Quote from @Robin Simon:

tried and true in this business - if the question is "how are they doing it" - the answer tends not to be that have a magic secret sauce, but that the business model was flawed.  80% Cash-Out Refinances throughout 2022 was always met with that question by at least me...now I guess we see the answer

 They definitely had some higher risk products. We definitely saw value as brokers in that 80% cash out with them in major metros when we saw flippers getting frozen like deer in headlights recently but like you said sometimes if it sounds too good to be true.... it is!... or at least it can't last very long when markets take big shifts.   

[Alex Bekeza]

Quote from @Issac San Miguel:

I just had someone bring me a loan request - 90% LTV with a 624 Fico that they had approval at Civic - why are they struggling? They wrote risky loans.

I'm sure you'll be getting more of those calls.  We're getting a ton of inquiries right now from their fall out as well. 

I never really thought that their DSCR loans were very competitive (typically much higher rates than other options BUT long term IO) and I really only kept them in mind for those real high dollar amount flips for SFRs since a lot of our other channels would cap at $1.5M or so. They'd comfortably go up to $3M at max leverage and much higher at reduced leverage.

[Issac San Miguel]

Quote from @Alex Bekeza:

Quote from @Issac San Miguel:

I just had someone bring me a loan request - 90% LTV with a 624 Fico that they had approval at Civic - why are they struggling? They wrote risky loans.

I'm sure you'll be getting more of those calls.  We're getting a ton of inquiries right now from their fall out as well. 

I never really thought that their DSCR loans were very competitive (typically much higher rates than other options BUT long term IO) and I really only kept them in mind for those real high dollar amount flips for SFRs since a lot of our other channels would cap at $1.5M or so. They'd comfortably go up to $3M at max leverage and much higher at reduced leverage.

 I’ve got a great product up to $3m. 

[Alex Bekeza]

@Issac San Miguel DM me about that.  We have some solid private money options within our network for those luxury deals when they come up (I'm local to SFV/Calabasas and there's a handful of groups headquartered here willing to do them) but I'm always interested to see if there's a more aggressive option out there to make it a win win with the borrowers. 

[Allan Smith]

It doesn't sound like they are going under, maybe their rates just have to go up.  to be fair theirs was a product for hot markets. Might be the end if an era. 

I borrowed from them once in 2018. Slow clunky closing but otherwise it was fine.

[Jonathan Taylor]

@Allan Smith I cannot say with confidence that they will go under but I had files with them and my rep advised me to pull my files as they have paused lending for 30-60 days. Not a good sign so we will see but as of the time of this writing, Civic is not an option. 

[Brian Simmons]

Corvest was crazy successful for a long time and the positive impact they had on the industry should be respected. These are extraordinary times and everyone is negatively affected by this market. 

[Caroline Gerardo]

Quote from @Allan Smith:

It doesn't sound like they are going under, maybe their rates just have to go up.  to be fair theirs was a product for hot markets. Might be the end if an era. 

I borrowed from them once in 2018. Slow clunky closing but otherwise it was fine.

 MANY other lenders closed doors, filed BK there are now a million people in mortgage and vendors laid off.

Pain for all the borrowers in process at Civic who are advertising for default management jobs.

This Great Recession is real. 

If you need a referral to a new source feel free to hit me up

I need: property state, valuation today, what you want to achieve, your guess of your middle FICO, are you experienced, can you go full doc, or can the subject cash flow with market rents, loan you want.

I will give you a rep and a source or I can do it 

[Eliott Elias]

I've had lenders call me and tell me they stopped lending for a few months. A lot of hard money and DSCR circulating right now.

[Alex Bekeza]

@Brian Simmons I couldn't agree more.  Hopefully my post didn't come off the wrong way.  I have nothing but respect and admiration for some of Civic's previous leadership team and support staff but their departure has caused a considerable shake up that personally affected our office.  I have personal relationships over there inside and outside of mortgages so there's nothing personal about this post at all.  As evident by the reactions in this thread, all lenders/brokers seem to be getting calls with Civic fall out based on them having a large pipeline partially due to having terms that were probably too risky or a bit of an overpromise.  

However, like you said, everyone is feeling this gut check right now not just Civic or the other lenders who have officially shut their doors.  Just gotta barrel through and get to the other end of this.  Now more than ever I am very thankful that I don't work for a direct lender.  Being on the broker side allows us to shift gears in a hurry when these market shifts occur and stay in front of where the cost effective capital is efficiently flowing from. 

[Matthew Davies]

I've spoken to a few borrowers who have mentioned "Civic 2.0" is launching 09/01 - with 80% cash out LTVs. Can anyone corroborate this?