[Issuer] New Silver

About

Founded in 2018, New Silver is a technology-enabled non-bank lender primarily focused on providing real estate-backed financing for the United States “fix and flip” sector with a concentration on single-family residential assets. Bridge loans, also referred to as fix and flip loans, allow real estate investors to finance both the purchase and the construction, or in some cases, refinance an existing investment property with sufficient equity.

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Company Name New Silver
Website https://newsilver.com/
Asset Type Short term real estate bridge loans
Pool Summary NS Series 2

Company

Please give a brief history of the company and, if applicable, group structure.

New Silver provides a variety of 1st mortgage loan solutions ranging from acquisition/construction loans to 30-year permanent financing for stabilized assets. New Silver is heavily concentrated on shorter term bridge/”fix and flip” products with 12-24-month terms. This pool will be generating interest against collateralized bridge loans.

Please give an overview of the legal structure.

New Silver Lending LLC (“New Silver” or the “Asset Originator”) has launched NS Pool LLC (the “Issuer”), a Delaware limited liability company, which will offer for sale to investors tokens, corresponding to certain payment obligations owed to the Issuer by various real estate developers.

Organization

How many full-time equivalent team members do you have and what do they do?

We have 5 full time team members. The New Silver co-founders, Kirill and Alex, have known each other for many years. Over the last 20+ years, Alex has worked his way up to a CFO at a large commercial real estate operation in Connecticut. Kirill has started and exited a number of technology companies. The third team member and CTO is Alexey Shevchenko. We also have 2 additional team members in the marketing department, and are actively hiring people in sales and tech.

Have you sold equity? Are you venture funded, if so please describe the previous rounds, money invested, and lead investors.

We have not raised institutional capital, we raised around $500k from the founders.

Asset Details

Describe the asset collateral that you seek to finance.

Real estate bridge loans

Describe your previous track record related to this business proposal.

To date, the company originated over $35mm loans and had no foreclosures. Prior to Covid19, the company was originating $3-5mm per month, and took a pause during the pandemic to assess market risk. As of the date of issuance, the management team is confident in the single family residential (SFR) sector - consumer mortgage rates are at all-time lows, mortgage applications are near their all-time highs and increasing while home mortgages in forbearance are decreasing and foreclosures for the year are lower than in the past years. While the commercial real estate market may be temporarily affected by the pandemic, the management team feels strongly that the SFR market is substantially different and will continue to have a scarcity of supply thus driving demand and price appreciation. New Silver anticipates originating up to $50M in the next 12 months.

What is the average collateral asset size?

Average Loan Size: $190.000

Describe the risk of the assets you are proposing. How do you evaluate and manage that risk?

This is a non-exhaustive list of potential asset specific risks that are described in detail in the executive summary: general real estate risks (e.g. fluctuations and cycles in performance), borrower default risk, failure to recoup full value of the underlying asset in foreclosure, risk of lack of knowledge in certain geographic areas, environmental risks, lack of geographic diversification

Disclosures

Please describe any conflicts of interest or potential conflicts of interest or any relationship that could compromise or be viewed to compromise the decision making of the company.

No

Are there or have there in the last 10 years, been any criminal, civil, regulatory or administrative proceedings against (i) the Company or any of its principals or (ii) the product in any similar such matters including reparations, arbitrations, and negotiated settlements? If so, please describe.

One of New Silver’s co-founders was involved in a blockchain project called Caviar in 2017-18. Caviar and New Silver are entirely different entities and have no business overlap. Caviar performed a compliant fund-raise outside of the United States, reliant upon Reg S exemption from registration. Due to political sentiment towards cryptocurrencies the state of Massachusetts targeted many blockchain startups - Caviar among them. The sole allegation the state could bring forward was that Caviar had conducted “offering” improperly and targeted MA residents by social media advertising. Caviar’s marketing company, while excluding the U.S. and a number of other countries from their ads, did not turn of re-targeting to US users which caused the state to make this claim. As this was the sole allegation and no further action was taken, Caviar decided to settle in February of 2019, paid a fine and agreed to refund any investor from the state of MA (of which there weren’t any). As a result, the founders also decided to close Caviar and provided refunds to all investors. This has no bearing on business activities today and in the future.

Are there any further disclosures that interested parties should be aware of?

No

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Hey :wave: there
I have two friends I’m currently helping to onboard and they would like to invest in the new silver pool so the question is @Lea when does this pool sign new asset contracts and the pool opens up again?
Happy Wednesday

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I’d love to learn when the next open is. Do you have a newsletter or TG where we can get notified?

@LeGo we will announce in this forum for sure, please keep an eye here. Most likely in the next 2-3 weeks.

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We wanted to share an important update. New Silver, as one of the pioneering real world assets on DeFi, is positioning to use the recent momentum to expand loan originations and capture market share in a highly competitive real estate market. Given the overall market rates and the environment we operate in, one of the ways we plan to attract highly qualified borrowers is with very competitive pricing. In light of this, we have recently announced a major rate reduction for our Fix and Flip, Refi and Ground Up loan products.

At the same time, we are also announcing DROP rate decrease from 5% to 4% APR, starting on June 4th, 2021. This was communicated to existing investors via email 2 weeks ago.

We will be providing further updates as they are available.

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We wanted to give you an update on our activities in the month of May. Though housing supply is short, we continue to outperform and posted a record number of loan applications, over 150 in May. This led to a substantial pipeline growth, and good origination volume.

We were also able to lower rates and we believe we are now one of the most competitively priced lenders in the marketplace. On top of that, we continue to innovate on the technology front and introduce features to make lending faster and easier.

One continuous struggle we are working through are collateral valuations - we rely on a third party network of independent appraisers, who are extremely busy. This affects the whole industry, and there is little we can do. We are in the market for a technological solution, if one exists, to help us speed up this process.

Loan Originations

New Loans: 12
New Loan Dollar Volume: $3.56mm
Average Interest Rate: 9.5%
Average Loan Amount: $297,400
Average Loan to Value: 77%
Average FICO score: 705
Current MakerDAO Debt Ceiling: $5m

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

Technology

We are on track for a major release this week that will include a brand new Servicing module which will allow us to track loans after closing, report, manage construction draws, and integrate with the servicer of record for real-time updates.

People

There were no new hires in May. We have been focused on bringing on a full time recruiter to help us fill open positions. One of the newly hired loan consultants did not work out, and we will be replacing that role, and hiring others, in the coming months.

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Dear Community,

We have been very busy originating, improving and adapting. We are making a number of improvements on the legal and tech sides, which will be announced shortly. Our pool has been growing as well and is now over $8mm!

We wanted to announce that we have re-opened the pool to new and existing investors. Here is the link to Tinklake in case you need it: https://tinlake.centrifuge.io/

Here are some the recent properties we financed. We are continuing to fulfill our mission, which is to enable entrepreneurial growth by providing real estate investors with fast, conveniently accessible capital, and by harnessing technology to improve investors’ journey, from property search to sale.

5 Likes

Dear Community,

This is a repost of the July 2021 update originally posted on the MakerDAO forums. Our pool is open for new investors, please reach out to us if you have any questions.

July was a very busy month on all fronts. We are busy building new tech, improving the process and working through challenges that permeate the general real estate market. Please see our July update below:

Loan Originations

New Loans: 17
New Loan USD Volume: $7.84mm
Average Interest Rate: 9%
Average Loan Amount: $461,386
Average Loan to Value: 65%
Average FICO score: 697
Current MakerDAO Debt Ceiling: $20mm with about $5.8mm used

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

Technology

We have released a major update that includes the Servicing module, this enables tracking our loans from originations to maturity, and provides borrowers enhanced online features for tracking their loans and construction. We are currently working on integrating with Tinlake, this will enable much faster and error-free NFT minting. We will also be looking into improving loan status reporting so that the community can see updates in real-time.

People

We made new hires in July, Katrina will start this month as a Senior Paralegal and Carmel as our Content and PR Manager.

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Can you break out the Average Loan To Cost, Average Loan To Value (iniital) and Average Loan To After Repair Value which may be what your “Average Loan to Value” is referring to?

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Sure, here is the data for last month for loans added to Tinlake:

Average LTV (as-is) - 63%
Average ARV (after repair): 67%

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Why is the AIV-LTV so low? Typically we’re seeing higher day 1 LTVs (75-85%) across all loan purposes with the exception of New Construction

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Hi there, why has the tracking of the Reserve Ratio disappeared from 20th April 2021 for this pool? The other pools on Tinlake continue to show Reserve Ratio over time. Thanks

Hey, thanks for the update. Looking at the interest rate these developers pay on the loans, can you please break down line where the interest goes to before it goes to the investor?

Eg the developer takes a $100k loan at 10% interest. The Tinlake investor receives 4% interest on their DAI. So where does the remaining 6% go?
How much to the TIN tranche?
How much to Tinlake as a fee for running the pool?
How much to NewSilver for managing the loan?
Etc?

Thanks

1 Like

In this case, the credit line from MakerDAO functions as the reserve. I would expect to see this in the future on other pools with access to MakerDAO.

Dear Community,

The below is a repost from the MakerDAO forums.

I wanted to spend a bit of time in this update to highlight something we have been working on for a few months now - a way to improve and speed up the collateral valuation process. As I have highlighted in our previous updates, the collateral valuation process is extremely archaic (please see an informative article here if interested in more info), takes a long time, at times, has quality issues. The appraiser population is getting older and dwindling in numbers. We believe technology is the only solution for a long term (albeit partial for now) fix to this problem, which is only getting worse with time.

We put together a presentation on how we are looking to improve this process. TL;DR:
We have partnered with 2 vendors, outlined below, that we intend to utilize to mimic what the appraisal process does today, but do it with more efficiency and accuracy - TruePic for pictures and HouseCanary for valuation. TruePic is a industry leader in obtaining and processing photos with advanced fraud detection. HouseCanary is an industry standard real estate valuation software that will enable us to adjust values based on property condition. We have begun using these solutions in addition to obtaining the appraisal report, and will continue this for about a month, after which time, we will provide data and hope to switch to using this new process for valuing certain collateral (under $500k, single family only, light to medium rehab).

Loan Originations in Tinlake

The numbers for September are lower because we have used up all of the available TIN. If you are interested in a TIN investment, please DM me. We anticipate yields of >20%, plus the CFG rewards.

New Loans: 4
New Loan USD Volume: $1.59mm
Average Originated Interest Rate: 8.75%
Average Tinlake Finance Fee: 6%
Average Loan Amount: DAI 379,875
Average Loan to Value: 81%
Average FICO score: 718
Average Term: 13.5 months
Current MakerDAO Debt Ceiling: $20mm with about $8.7mm used

**data provided is based on loan origination date, not finance date

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

Technology

We have added numerous improvements such as the ability to add a co-borrower to the loan app. We are still working on a tighter Tinlake integration and a number of other innovations.

People

Recruiting a full-stack developer and a capital markets analyst. If anyone has any friends who may be interested, please DM me.

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Please see our monthly update below.

Dear Community,

Another very busy month. I wanted to provide a bit of my view on the state of the real estate market in the US. It has not changed significantly from the last month, it remains a sellers market, prices are climbing and homes are getting less affordable. This cycle can not continue forever, and we believe there will be a tapering in 2022. This could be accelerated by a rate hike, however, in our view, central bankers are being very careful here, and we will likely see a small increase, which should cool off the market some, but there is a lot of pent up demand from first-time homeowners, who are a perfect “exit” from a flip. We are continuing to focus on suburban markets and markets where there are job opportunities, though with the remote-first model, this is all changing quickly. America remains a place where people want to move, live and work, and housing will continue to be in demand. Here is a report from Realtor.com on 2022 projections.

We are working to improve our systems and processes, and are going to share a new report hopefully next month, the report should provide more color and transparency on the loan book. I also know that Centrifuge is busy reworking the legal setup and we hope to continue to grow with MakerDAO. In the near future, we will pilot a “note purchase” program, essentially adding a wholesale business on to our existing origination business. We will aim to pilot purchasing a closed loan from another loan originator, we will of course fully underwrite it to make sure it conforms to our credit box. This could be a potential way to expand the portfolio sustainably. Will provide more on this in a separate post once we have a bit more info.

We have also completed another month of testing a new way to value some of the collateral (described in more detail in September, and the results met our expectation. You can review the results for properties that fit the profile for this, with both of the appraised values, conditions based on TruePic images and HouseCanary values based on the condition, both the median and the average are well under normal ranges. We are satisfied with the results and will begin applying this method to selective properties (as described in the previous post) going forward.

Loan Originations in Tinlake

We originated a total of $7.8mm total, however, due to capital constraints in the pool, a smaller number was added.

New Loans:12
New Loan USD Volume: $2.8mm
Average Originated Interest Rate: 8.8%
Average Tinlake Finance Fee: 6.17%
Average Loan Amount: DAI 234,632
Average Loan to Value: 67%
Average FICO score: 720
Average Term: 12 months
Loans Paid Back: 6
Current MakerDAO Debt Ceiling: $20mm with about $10.6mm used

**data provided is based on loan origination date, not finance date

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

Technology

Working on a real-time report to provide more transparency into the loan portfolio. Also redesigned our web-app, this will be live soon.

People

Please welcome our brand new Head of Capital Markets, John Coury (@John_NewSilver ), he comes to us with tons of real estate and private equity experience, though he is new to DeFi, he already learned a lot and is looking forward to participating in the community.

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Please see the December 2021 update and 2022 commentary below.

Dear Community,

In this post, I will cover the activity of the last month of 2021, and offer our outlook on the macro trends of 2022. December was a bit slower on originations, mainly due to US Thanksgiving holiday and the end of year holidays. We took in an overall of 247 applications and closed on 16 loans, with specifics below. We are also following closely the macro trends that are happening in the US housing and financial markets, as those two are closely related. We are coming into 2022 with rampant inflation (>6% year over year increase) and a similar increase in the Consumer Price Index. The Federal Reserve promised to raise rates 2 times, and now 3 times, in 2022 (none of this is certain until it occurs). NASDAQ is down some (but still much higher than a year ago) and the same goes for the cryptocurrency markets. The era of “free” central bank money may be over, for now. Coronavirus is still amongst us, in many different forms. So what is waiting for us in 2022?

While I am not focused nor qualified to opine on the overall economy, I will just say that our thesis at New Silver is that market corrections come and go, this is likely one of them, and it may be a good thing. Overheated markets are not good for anyone, and eventually, bubbles pop. Stocks are still expensive, even at these levels. And we do not believe that politicians have the appetite to raise rates too high and drive down the stock market too much on their watch. Specifically in real estate, the markets are continuing to be very robust. Mortgage rates are still low, sitting at 3.22% at the time of writing, so while prices have appreciated and continue to do so, first time buyers (who make up a large chunk of homebuyers) are still able to afford homes. Millennials, unlike many predictions some years ago, are buying homes and settling down, though not always around the major metro areas as before, since many are now able to work remotely. We believe that mortgages rates under 4% are still historically low and will allow new buyers to enter the market, and allow our clients, the real estate investors, to resell renovated property to these buyers. There is also a vast shortage of entry-level homes across the country, and this shortage is continuing to accelerate (the shortage is estimated to have been 3.8mm units in 2020, see Freddie Mac). One other concern has also been raw material pricing, and how this will effect borrower budgets - we keep a close eye there and make sure that budgets have some cushion, and all of our borrowers have extra liquidity on hand. We have not had any different effect of this so far, and believe that a lot of the price appreciation has been due to supply chain interruptions, which should be slowly resolving in 2022.

We believe that the robust real estate market will continue in 2022, and will continue to propel strong, quality originations at New Silver, with ample exit possibilities to either a sale or a rental. We are continue to focus on building technology and process to speed up originations, improve other areas like underwriting and post-close, and work closely with our partners to bring high-quality assets. We are also engaging in an internal project to study how, using the funds we advance to borrowers, we can do our part to be more sustainable and climate friendly, and would like to start offering some incentives to “green” builders in 2022. Would love some community feedback on this topic particularly.

Loan Originations in Tinlake

New Loans:16
New Loan USD Volume: $3.7mm
Average Originated Interest Rate: 8.7%
Average Tinlake Finance Fee: 6.02%
Average Loan Amount: DAI 219,372
Average Loan to Value: 64%
Average FICO score: 722
Average Term: 12 months
Loans Paid Back: 4
Current MakerDAO Debt Ceiling: $20mm with about $10.7mm used

**data provided is based on loan origination date, not finance date

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

Technology

Working on a real-time report to provide more transparency into the loan portfolio. The redesigned web app is now live.

People

We are hiring developers and loan processors, anyone interested in applying please let me know.

2 Likes