500- immediately solidified their position in the hard money lending space. They would also seize the opportunity to target the brokerage community by offering a product to brokers to fulfill the much needed stated income loan for those borrowers in the 500-550 FICO band.

Now, nearly 10 years later, FlexPoint Funding is one of the three largest institutional hard money lenders in the nation. But more importantly than that says Ryan, “we have helped bring legitimacy, understanding and additional capital markets recognition to this roughly $50 billion a year segment of the mortgage industry.”

not accept, had virtually no credit history, or, they may have tax liens, judgments and collections in their past that prevented them from getting a traditional subprime loan. In addition, foreign nationals would be eligible, and there would be no limit on cash out. With few exceptions, “as long as the LTV and benefit to borrower is there, we can work with just about any borrower’s situation,” says Ryan.

 

BUILDING ON COMMON SENSE

Having determined their niche, FlexPoint immediately began expanding a company that would ultimately bridge the gap

between borrower and broker, and broker and lender. Ryan serves as President and C.E.O., AMERICA’S TRADEPUBLICATIONFORMORTGAGEORIGINATORS driving the growth of the company via strategic moves, while Stanley serves as Chairman of the company, and tends to the company’s legal affairs, compliance and escrow services. The entire FlexPoint team has remained com- BBRROOKEERR BBAANNKKERRSS OOFF TTHHEE MOONNTHH

Flexpoint

_Funding mitted to exclusively meeting the needs of this R YAFL NEKXNPOTINTT , PF RU ESNIDDEINNTG& CEO

DANRAWITCH,PRESIDENTOFWHOLESALELENDING group of borrowers others had deemed too risky to be worth the effort.

FINDING THE GAP “Hard money lending became an obvious choice for us to pursue, as that segment of the industry has remained largely untapped,” says Ryan. Through research, analysis and a keen understanding on how to value properties throughout the nation, FlexPoint was able to deduce that retail brokers were receiving hundreds of thousands of loan applications per year from borrowers with FICO’s below 500. “Typical subprime lenders weren’t able to fund these loans, nor did they really have a desire to due to the overwhelming amount of refinance business that they were garnering at the time.” Ryan says. “Unless a lender is focusing primarily or wholly on hard money lending, and are of adequate size, not too big and not too small either, there is not enough market share or oversight capabilities for them to invest in creating and properly maintaining a department exclusively to underwrite loans to this group of borrowers. Publicly traded companies and lenders regulated by the FDIC have also shied away from these types of loans because of the lack of volume that can be generated in this space, and they typically don’t understand, or they have a preconceived view of this type of lending,” he continues.

FlexPoint Funding, on the other hand, embraced this group, and maintains today that “the default risk and losses are manageable so long as you properly scrutinize the underwriting and valuation of properties and don’t deviate and become an ‘exception’ based lender as most subprime lenders are. This is not exception based lending, ever,” says Ryan. The risk is decreased even more; he adds “because of the common sense approach that FlexPoint Funding uses to evaluate each application.” This common sense approach in the broad sense includes three key factors.

In short, this $50 billion segment was largely ignored, presenting the perfect gap for FlexPoint Funding to claim as its own. This gap would include borrowers with sub 500 FICOs, or who had Notice of Defaults or Notice of Sales filed and even ones where a Foreclosure was imminent. They may have required a stated income loan with a FICO below 550. They may have received a gift of equity that typical lenders would

First, “proper valuation of the property is imperative,” Ryan says. “You simply don’t make a mistake in value, in the hard money lending segment. Our maximum allowed LTV is 70%, and we cannot afford to be even 1% off in our valuation methodologies.” To that end, FlexPoint Funding confirms the value of each property with intense scrutiny, using a multi step process. In addition to working with seasoned appraisers, FlexPoint’s review appraisers diligently pore over listings, sales comps, reviewing the properties (inside and out, with interior photos required), and most importantly, studying statistics