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Omar Esposito

Season and Sell 2.0 powered by Stackfolio

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Anderson Tax & Finance Law is proud to announce the Season & Sell 2.0SM: The 20-Day Season & Sell ProgramSM Powered by Stackfolio

Stackfolio and Anderson Tax & Finance Law, LLC today announce the official launch of Season & Sell 2.0SM, a less expensive and more efficient method of trading newly-originated US loans to its offshore affiliates.  This program utilizes the Stackfolio online marketplace for loan trading to facilitate and establish a bright-line standard for trading newly-originated US loans offshore and introduce greater efficiency to debt capital markets.

Highlights of The 20-Day Season & Sell ProgramSM:

  • The only proprietary 20-day offshore affiliate loan-trading program in the market.
  • Establishes the new standard for offshore affiliate loan trades.
  • Cheapest, quickest and most efficient offshore affiliate loan-trading strategy.
  • Eliminates many historic, tax-motivated, expensive, and inefficient operating guidelines of direct lending fund managers and offshore CLO sponsors.

Getting Started:

  1. Sign up on Stackfolio for free.
  2. List your loan on Stackfolio’s Marketplace for free.
  3. Simultaneously:
    • Trade your loan to the highest bidder at or above par on the 20th calendar day.
    • Pay the Stackfolio transaction fee after the loan trade closes.
  4. Execution of boilerplate tax opinion backup certifications.
  5. Receipt of US federal income tax opinion at “will be” level of certainty from Anderson Tax & Finance Law, LLC.

Contact Stackfolio or Anderson Tax & Finance Law for details and begin listing your loans today.

Stackfolio
Omar Esposito
Chief Revenue Officer
omar@stackfolio.com
404-660-1180

Anderson Tax & Finance Law, LLC
Todd Anderson
Founder and Managing Member
todd@andersontaxandfinance.com
646-942-0311

 

Why HELOCs Should Be On Your Radar

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In a market with rising home values, increasing interest rates, and homeowners reluctant to refinance or sell, many homeowners are turning to home equity lines of credit (HELOCs) to meet their financing needs.
So this means HELOCs should continue to be an attractive and growing loan product offered by originators.
Why are borrowers using HELOCs?
  1. Cheaper. HELOCs can be a cheaper alternative than other common forms of borrowing such as credit cards or unsecured personal loans.
  2. Versatile. HELOCs give borrowers a lot of options for how to use the funds. Whether it’s paying off credit cards or debts or making home improvements, they allow homeowners to borrow smart.
  3. Not The Same as it Used to be. Many recall a very different borrowing and lending structure of HELOCs from prior to the financial crisis of 2008. Today, however, lenders are far stricter in their underwriting. So borrowers today have much higher credit scores and borrow less of the available equity in their homes.

Why Should Residential Mortgage Owners Care?

As noted by Fort Schuyler Advisors, a look at recent Google trends showed an increase in HELOCs searches with the search index being the highest in five years. Couple this with a recent TD Bank which showed 35% of millennial customers willing to consider a HELOC product, there is clear segment of borrowers in the market that can help drive loan growth via HELOCs.
In addition, with the refinance mortgage market at a standstill, growing HELOCs origination can offset the drop in mortgage activity many originators have faced so far in 2018. 
Secondary Market Considerations
  1. Buying HELOCs
    There are many originators that do not have experience with HELOCs, but see the value in the product. So some have turned to buying HELOCs via loan trading.  Buying via an online marketplace for loan trading can be a very cost effective and time-saving solution.  This allows the buyer to avoid the costs of origination and the potential challenges of setting up and operating the underwriting process. In addition, it can be far easier to strategically target the loan growth by specified geography, credit box, size of the loan, etc. 
  2. Selling HELOCs
    On the other side of the spectrum, there are many originators of HELOCs that have kept the loan origination in their portfolio but are in need of liquidity. Selling via an online marketplace for loan trading has shown to be efficient and profitable solution. In a recent large HELOCs trade on Stackfolio, the seller was able to earn almost a 2% premium on the traded balance. This sale allowed the originator to book the non-interest income from the premium while freeing up capital and capacity for new origination and loan growth.
    Also, sellers also have the ability to retain their servicing during a loan sale. So while sellers benefit from the added liquidity, they do not lose their valuable customer relationships during the process.
Omar Esposito serves as the Chief Revenue Officer of Stackfolio. His experience stems from over 15 years of whole loan trading, banking, and balance sheet management experience. At Stackfolio, Omar focuses on executing the company’s go-to-market strategy, scaling and aligning all revenue-generating aspects of the business, and building long-lasting client relationships with financial institutions across the country.
Stackfolio is an online marketplace for loan trading and participations between financial institutions. Click here to visit the Stackfolio Marketplace.

The 3 Most Important Questions that Guide Whole Loan Trades

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“Where do I even start?”
Deciding to begin whole loan trading in the secondary market is a huge leap for any institution. Not only are whole loan trades long and cumbersome — they’re also extremely complex and require a lot of forethought.
Even with 15 years of experience in the banking industry and after strategically advising hundreds of financial institutions on balance sheet management, I’ve found that educating financial institutions on how and when to execute a whole loan trade still requires a lot of time and consideration.
To guide my thinking, particularly for whole loan purchases, I always look to answer 3 main questions:
  1. What do I need to earn from this trade for it to make financial sense for my institution?
  2. What type of diversification do I need to achieve in my portfolio from this trade?
  3. How much risk am I looking to absorb?
Why these three? Each question gives me insight into not only the type of loans and transactions I should be looking at, but also the type of trading partner I’m looking to engage with and the level of complexity I can expect from this transaction. Here’s how I try to answer each question:
1. What do I need to earn from this trade for it to make financial sense?
More so than just looking at the expected yield from a trade, this question asks you to dig into the full monetary benefits a loan trade can bring. With so many institutions searching for loan growth in their communities, organic loan growth has become harder and more expensive to compete for. So, I would look to answer how much money will my bank or credit union save in origination costs from a whole loan trade. Will these loans bring me a larger opportunity to cross sell new borrowers from new markets? Also, how much in fees would I save in using an online loan trading platform over legacy brokers in the market?
2. What diversification do I need in my portfolio?
While this is often a regulatory concern and question, determining the type of loans that I want to acquire is often a larger strategic initiative. For example, do I need to do a loan trade to achieve our residential loan growth targets for the quarter? Will I be able meet my CRA loan target needs without a whole loan trade? Or do I need to buy a niche loan pool to reduce concentration in core parts of my loan portfolio?
Being able to answer these questions and knowing how to execute them efficiently is critical in engaging in a whole loan trade.
3. How much risk am I willing to absorb?
Like the answers around diversification, determining how much risk your institution is prepared to absorb is key when preparing to enter a whole loan trade. One key insight to get here is not just around what level of risk in the loan asset type, but the credit characteristics within those asset types as well. So are you only looking to acquire prime borrowers in unsecured consumer loans? Does a barbell distribution of risk work if it brings you the loan assets you need?
While there will be more questions asked during a whole loan trade and many more answers needed to complete one, answering the big three questions above will ensure your institution can begin its journey of trading in the secondary market with confidence.
Omar Esposito serves as the Chief Revenue Officer of Stackfolio. His experience stems from over 15 years of whole loan trading, banking, and balance sheet management experience. At Stackfolio, Omar focuses on executing the company’s go-to-market strategy, scaling and aligning all revenue-generating aspects of the business, and building long-lasting client relationships with financial institutions across the country.
Stackfolio is an online marketplace for loan trading and participations between financial institutions. Click here to visit the Stackfolio Marketplace.