Who are the big DSCR note buyers?

Question

Any intuitions that are buying DSCR notes that you're aware of that you sell your DSCR notes to? We are considering starting to write and fund our own DSCR notes in house along with our RTL loans, but curious who is buying these notes? Any insight?

John Langston · Answer

HElo Joseph,

No idea

GOodnight,

Jay Hurst · Answer

You need to do 100+ mm a month to sell directly to the end source like Apollo. But, Apollo for example, owns and  buys loans from NewFi on the DSCR side and Dunmor on the RTL side. You would start off as a broker and then build to non-del or deligated as you grow.

Jay Hurst · Answer

We only balance sheet our short terms loans like the Buy Before You Sell, RTL, Just missed agency bridge loans.   We do have a new product that we are doing that we do a rehab to rent RTL on our balance sheet but modify into a 30 year fixed DSCR that we have a direct capital partner buying those from us. But, the typical purchase or refi DSCR loan we sell in the non del channel or even broker.

Joseph Pytcher · Answer

Thanks Jay, I know you guys do DSCR. Are you balance sheeting those? We're already a direct lender on the RTL side though, we're just adding additional products.

Patrick Roberts · Answer

Most wholesale investors offer broker and non-del channels. Going delegated is a big deal. There are quite a few wholesale investors out there, but the process for this is fairly serious and the requirements are strict. To Chris's point, usually there are net worth and monthly origination volume requirements. Maxex is one of the more common exchanges for note buyers, but I believe you have to be delegated to sell to Maxex.

Chris Seveney · Answer

We have spoken to several and right now - many are not allowing you to sell to them directly and are wanting you to broker it so they do the underwriting and processing because of some of the issues that are going around in the DSCR space. we do have one correspondent relationship but we have to do $5M a month min with them and had to have $25M net worth.

Note that these buyers do have buyback clauses in them that typically have 6 month buy back if borrower misses a payment or any type of error in loan docs.

My recommendation is to go to AAPL or NPLA events to start meeting with some of those players.

Joseph Pytcher · Answer

Hey Chris, we're going to AAPL in Nov. I'll try and network with some note buyers.

Mike Grudzien · Answer

Good advice!