Much of my time, since April 16, 2011 has been spent meeting with secondary mortgage market investors, to develop a jumbo mortgage product. We see a good opportunity to serve a neglected niche of people by developing relationships with "private capital sources": credit unions, hedge funds, pension fund managers, and private investors. We think, as much as the government has hijacked the lending business, that there is private sector capital willing to lend money for the right yield.
This project is a byproduct of a conversation I had with Anthony Randazzo, at the Reason Foundation dinner in Laguna Niquel. Mr Randazzo is one of the leading voices in Washington DC in the effort to kick the government out of the mortgage business. He explains why a truly free mortgage market is not only just policy for the taxpayers but is the answer to long-term stability in housing:
At a hearing in February, Mr. Frank changed his tune, calling for “abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance.”
He’s half-right. The answer is to abolish Fannie and Freddie. But the government should stop there. We don’t need a “whole new system of housing finance.” The federal government doesn’t need to be involved in the mortgage business at all. Plenty of healthy, viable banks are willing to do that.
The central role that Fannie Mae and Freddie Mac played in the financial crisis shouldn’t be ignored. Without the lowered lending standards at Fannie and Freddie, mortgage originators would have paid more attention to the loans they were issuing, because the risk wouldn’t have been shifted onto taxpayers so easily. And without the failure of Fannie and Freddie in September 2008, the market might not have destabilized, leading to the bankruptcy of Lehman Brothers, the quasi-nationalization of AIG and, eventually, the bailout of the financial industry
I thought I was the lone capitalist voice in a market dominated by Wall Street welfare queens. Naturally, Randazzo's work inspired me to action. Yesterday, World Wide Credit Corporation organized a division to provide "capitalist solutions" to the California mortgage market and we named it Jumbo Mortgage Capital. We've identified non-traditional lending sources, normally eschewed by most local lenders, and can offer the following products to California home buyers and owners:
- fixed-term ARMs, for loan amounts up to $4,000,000 (fixed terms range from 3 years to 10 years)
- 30-year fixed-rate loans for loan amounts up to $4,000,000
- stated-income jumbo mortgage loans for loan amounts up to $2,000,000
- stand-alone Home Equity Lines of Credit up to $500,000
- jumbo mortgage solutions, with just 10% down payment, up to $1,000,000
Stay tuned for more information here.