\n<\/p>\n
Amid surging rates, declining volumes and a reduced appetite from investors in the secondary market, there are a growing number of casualties in the mortgage space, especially in the riskier non-QM segment.<\/p>\n
First Guaranty Mortgage Corp<\/strong>. (FGMC)<\/a>, <\/strong>controlled by global investment management firm PIMCO,<\/strong> filed for Chapter 11 bankruptcy protection in June. Michael Strauss’s Sprout Mortgage<\/strong><\/a> shut down in July, laying off its staff without paying salaries and severance. Meanwhile, Athas Capital Group<\/strong><\/a> <\/strong>is winding down its operations and Impac Mortgage Holdings<\/strong><\/a> is backing off the product.\u00a0\u00a0\u00a0<\/p>\n But right when several companies are turning away from non-QM products, a Colorado-based lender has decided to launch a new division to cater to this market. The question is: why?\u00a0<\/p>\n Stronghill Capital \u2013<\/strong> a small-balance commercial lender owned by the $20 billion-plus asset management firm ArrowMark Partners <\/strong>\u2013 announced last week it had launched a new residential lending division to provide borrowers with non-QM products, non-agency jumbos and investor programs.<\/p>\n “Probably it seems very counterintuitive when companies are running away from the flames in the fire, to see a company like ours making an announcement that we are going to go full bore running into the fire,” Dustin Wells, recently appointed as the co-president at Stronghill Capital, told Housingwire.\u00a0<\/p>\n Stronghill, however, is no stranger to the non-agency and investor loan space.\u00a0<\/p>\n The company sells loans via brokers for clients \u2013 usually LLCs, C-corps or S-corps \u2013 to acquire residential real estate for commercial and investment purposes. Now, business owners can also apply for a mortgage loan as an individual.<\/p>\n “So, for example, if I’m a business owner working with a brokerage to buy five investment properties that I’m going to invest in my LLC, but I also want to buy a new primary residence or a second home, now we can be that one-stop-shop for this client,” he explained. <\/p>\n According to Wells, Stronghill originates about $500 million a year to real estate investors, employing about 30 staff members, and has “trusted partnerships with warehouse providers in the space to provide credit facilities to fund loans on an ongoing basis.”<\/p>\n