It has been reported that Memphis Invest has just lost much of their conventional lending capacity for investors. All cash investors are not affected.
It is reported that Prime Mortgage was uncomfortable with a perceived conflict of interest between a sales and property management company being under one roof.
Guild Mortgage has dropped them because of reported Fannie repurchase orders on many loans originated from Memphis Invest clients. They have apparently been ignoring Fannie trust deed restrictions and it has finally caught up with them. Apparently there are more inflammatory issues under investigation around acquisition, assignment, transfer and appraisal irregularities.
This gives Federal housing agencies heartburn. They have easily sanctioned other entities for these sorts of violations
No matter how good and ethical a vendor may think they are, an undeniable problem is the loan buy backs or repurchase orders to a conventional lender. This is bad message to any lender underwriting staff and contrary to and bank reserve management methodology.
The lender loses lending capacity and reserves as they now become portfolio loans for a lending business designed around a secondary market sell-through model. This can mean huge revenue and margin loses.
Investors are under the gun also.
Apparently up to 60 loans in were process when Guild turned off the loan tap. We ask what happens to the investors, investor deposits, houses in inventory, renovations, carrying costs, etc., while they replace conventional lending capacity?
Memphis Invest will need significant resources to carry them over this fundamental recalibration of their business as they move from leveraged investor sales to cash buyers. An alternative may be to try and convince investors mezzanine or hard money interest rates are acceptable on top of already modest net yields.