@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.
6 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
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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.
2 Likes
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.
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Hi @prankstr25, can you please also elaborate on the compliance part of Centrifuge. What are the compliance and legal requirements on the part of Centrifuge here?
Hi there
Can you clarify your question? Do you want to know about the compliance of investors that invest into NS2 pool or the compliance of loans?
Cheers
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Hi Taiyo,
this is an important question. Thanks for asking. If you are interested in the overall legal structure of the Tinlake pools you can read more about it in the documentation:
Thank you
Received an email with all the essential info yesterday!
Please see the February 2022 update below:
Dear Community,
Apologies for the slightly late post. I will spend a little bit of time on macro market commentary, because its not much changed from January. I will focus the majority of this post on the various improvements we are making to continue to institutionalize our business. Here is a brief overview from the February 2022 realtor update:
- The national inventory of active listings declined by 24.5% over last year, while the total inventory of unsold homes, including pending listings, declined by 15.3%. The inventory of active listings was down 62.6% compared to 2020 before the onset of the COVID-19 pandemic.
- Newly listed homes were down 0.5% nationally compared to a year ago, and down 0.7% for large metros over the past year. While annual new listings growth was on the verge of being positive, sellers still listed at rates 13.8% lower than typical 2017 to 2020 levels prior to the pandemic.
- The February national median listing price for active listings was $392,000, up 12.9% compared to last year and up 26.6% compared to February 2020. In large metros, median listing prices grew by 7.8% compared to last year, on average.
- Nationally, the typical home spent 47 days on the market in February, down 17 days from the same time last year and down 32 days from February 2020.
Next, I will discuss the steps we are taking to increase transparency and continue to impelement measures to institutionalize our operations.
- Hired a CFO, goal is to help us improve our finance, create models to help project and plan for growth and fundraise. He comes to us with experience at Goldman Sachs, Paypal and other enterprises.
- Engaged with Iron Mountain custody. The purpose is to have all of our paper loan closing docs (we already have all docs digitized) stored at an institutional grade custodian, and the RWF team has access to view and recall any of the paper loan documents.
- Improved and implemented assignment and allonge docs, this was reviewed and approved by RWF team. These documents should be in line with the “true sale” requirements of the newly published guidelines.
- Opened accounts with Signature Bank, which will allow direct fiat fund flow to intermediaries like Circle via Signet, help us keep funds more secure and transactional costs down.
Loan Originations in Tinlake
New Loans:16
New Loan USD Volume: $3mm
Average Originated Interest Rate: 8.7%
Average Tinlake Finance Fee: 6.0%
Average Loan Amount: DAI 318,954
Average Loan to Value: 62%
Average FICO score: 703
Average Term: 12 months
Loans Paid Back: 11
Current MakerDAO Debt Ceiling: $20mm with about $14.3mm used
Portfolio Analytics
Loan Performance
90+ day late: 0
Forbearance: 0
Foreclosure: 0
Technology
Migrated to Portfolio Analytics v.9, see screenshot above. Restarted Tinlake integration work.
People
Hired a CFO, a full-stack developer and a loan processor. We are now a team of 15!
Dear Community,
In this monthly update, I will focus on briefly discussing company updates, and spend some time on explaining how New Silver is thinking about real estate and adjacent markets in the short and medium term, how we are thinking about the macro-economic environment, and how we use data to forecast our credit environment.
TL;DR
Markets are adjusting to the higher rates, housing supply is still much lower than demand, materials are ever more expensive, housing prices continue to appreciate. We do not anticipate a repeat of the last housing crises because the fundamentals are very different today. We are tightening the credit box and making a few adjustments to be on the safe side.
Good news - New Silver has signed a $20mm term sheet with an institutional structured finance lender with $2b+ AUM, we are now going through due diligence. If the deal goes through, the lender will be in the mezzanine position, strengthen New Silver’s position as a lender, opening up opportunities for growth, and speaking to our efforts over the past year to create a unique, valuable offering and institutional-grade processes.
New Silver was the first pool to go live on Tinlake and the first “real world” asset voted in by the MakerDAO community, and our team has worked tirelessly building and improving on the 3 Ps of Credit - People, Process, Policies. We are now more than a year in, with no defaults, a better process, a bigger team, and agile credit policies. With the next leap, we believe the DAO will be even more protected as a senior lender, and will benefit from a robust process we are developing in conjunction with Centrifuge and in consultation with the RWF team.
Lets touch on the macro housing market trends and increasing rates. First, let me say that we know what our borrowers (real estate entrepreneurs) want: quickly accessible capital that is competitively priced, and a fast, convenient process that can be (mostly) done online. This is what we are/will continue to deliver. We were never the most nor the least aggressive lender, we are “middle of the road” on rates and leverages, but we are faster than most others. In an increasing rate environment, we hope to also become more competitive on rates viz a vie utilizing the Maker vault, but at the same time, use data and technology to choose the least-risky borrowers and projects to finance, thus creating a win-win scenario for everyone involved.
Data
- Research on “hard money” lenders from 2008-2013 timeframes, showing that our competitors had overall defaults of <2% with 1% average, and we believe market conditions were more adverse back then - we had a general recession, housing supply stood at 9-12 months in 2008 vs <6 months today, and personal savings are much higher today, so consumers have more money saved up.
- We believe that lack of supply will continue to drive price appreciation, or price stability, and this will allow for very small principal loss even in cases of defaults, as evidenced by a large bridge loan aggregator (<50bps principal loss on 4.4% foreclosure rate)
- However, housing is getting less affordable, though because of the supply constraint, we do not believe we are in a “bubble” territory at this time
- Banks have loosened some of their underwriting, allowing more people to obtain a consumer mortgage, but not to the level of pre-2008 crises. This bodes well for consumers who buy homes from our clients.
What New Silver is doing in the short term
- We believe FICO scores are great measures of borrowers ability to repay debt, they have been used for many years and have undergone many stress tests. Our portfolio is in the Prime category with an average of 700+, so this is healthy. We are increasing the minimum allowed credit score to 650 (from 620) for borrowers with experience, and 700 (from 680) for those without.
- We are decreasing the maximum LTC on ground up/heavy construction loans to 85% (from 90%) for non institutional level borrowers
- Increasing the profitability test to ensure the project will be profitable for our borrower even with a 5% price correction.
- Continuing to pay close attention to material pricing, this is partially driving up per square foot renovation costs, we review budgets closely and ensure that borrower has sufficient budget in place to cover possible increases in the coming few months.
Loan Originations in Tinlake
based on origination date
New Loans:14
New Loan USD Volume: $4.4mm
Average Originated Interest Rate: 9.1%
Average Tinlake Finance Fee: 6.4%
Average Loan Amount: DAI 320,776
Average Loan to Value: 72%
Average FICO score: 716
Average Term: 12 months
Loans Paid Back: 12
Current MakerDAO Debt Ceiling: $20mm with about $13.6mm used
Portfolio Analytics
Loan Performance
90+ day late: 0
Forbearance: 0
Foreclosure: 0
1 Like