PERFORMANCE
Coupon 13-15% in USD terms, net of fees, paid on a quarterly basis
GENERAL OVERVIEW
INVESTMENT FOCUS
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Non-qualified mortgage loan segment (non-QM)
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Fund targets borrowers with high credit ratings who can confirm their income
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Downside protection of 30-35% of the down payment
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Diversified portfolio of 800+ loans totaling $250 million with an average loan size of $300k
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Average mortgage rate of 5.75% annually
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Late payment share: 1% (historical data)
MARKET
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US mortgage market volume: $1.4 trillion annually
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Total volume of non-QM loans: $35 billion annually
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Share of payments late by 30 days has fallen threefold in 5 years
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Volume of unmet demand of non-QM loans: $200-300 billion
RISK
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All real estate is subject to independent assessment before issuing loans
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During the 2008 crisis, the real estate market declined by 18%, and the default rate was 18-22%
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Assuming a 30-35% down payment, a 30% real estate price drop would not lead to a loss for investors, even with a large share of defaults
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According to a consumer survey by FRS, real estate prices are expected to grow by 1.3% in 2020. Meanwhile, Zillow expects a 2-4% price drop
For more details please contact:
Investing in US real estate
backed mortgage loans
Fund
Information
Minimum investment:
US$ 150,000
Total volume:
US$ 50 mn
Starting fund volume:
$10 mn:
the fund manager has allocated
$5 mn in the fund
+ $5 mn investor’s commitment
Fees:
Subscription: up to 5%
Management fee: 1.5%
Performance fee: 50%*
* the success fee is only charged on returns above 8% p.a.
Hurdle rate: 8%
Fund manager:
ITI Funds
Fund
Information
Investment horizon:
36 months
Structure:
RAIF
Available in Euroclear:
Yes
Co-investors:
95%: Morgan Stanley, Bank of America, insurance companies
Service providers:
Mortgage loan portfolio
management: Imperial Fund
Mortgage examination:
banking group - Home Federal Bank of Hollywood
Administrator:
Mainstream Fund Administrator
States of presence:
AZ – Arizona
СA – California
CO – Colorado
CT – Connecticut
FL – Florida
GA – Georgia
NC – North Carolina
NJ – New Jersey
NY – New York
MD – Maryland
PA – Pennsylvania
SC – South Carolina
TX – Texas
VA - Virginia
Portfolio loans:
Borrowers with high credit scores:
weighted average FICO score: 720
Borrower profiles:
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95% of borrowers are self-employed and small business owners
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5% are self-employed and able to confirm high incomes; however, non-QM borrowers cannot qualify for QM mortgages as they do not have W-2 / 2 years of tax returns / paystubs, which are key requirements for QM mortgage loans (QM):
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DTI: borrower’s debt to income ratio is 43% or less
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Income verification: 2 year tax returns or W-2 + paystubs
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Automated underwriting
Mortgage rate: 5.75%
High initial deposit: 30 -35% of property value
