POP link here.
Dear Centrifuge Credit Team - we would be delighted to get your view and input on this proposal as well: @Davidjeng @JamesChan @ChrisDiamond @Mayoe @fanhong.123 @JeremyKim @roo @collincerickson
Havenly Financial Inc.’s (HFI) vision is to increase home ownership in America. With a focus on underserved markets, we seek to provide financing opportunities to home buyers typically locked out of the residential home loan market. HFI has access to efficient mortgage origination platforms from which to acquire loans, namely our affiliates American Portfolio Mortgage (APMC) and Town Square Mortgage & Investments, LLC (TSM). TSM funded over $1 Billion in residential mortgages in both 2020 and 2021, and $815 Million in residential mortgages in 2022 despite the rapid increases in interest rates caused by the Fed throughout the year. APMC and TSM ownership came together on 3/1/2023 and is in the process of merging the origination platforms resulting in an increased lending footprint covering 36 states. Both platforms focus on the home purchase market through retail loan origination. HFI’s subsidiary, Havenly Digital (HD), was created to leverage emerging decentralized finance (DeFi) to provide liquidity to APMC and TSM for originating loans in underserved markets while providing a return to digital investors backed by real-world asset yields.
HFI’s business model creates a unique platform allowing us to bridge the lending gap and match borrower risk with investor risk appetites.
- Revolutionary Credit Risk Process: Innovative and highly predictive credit risk assessment drives loan approval for homebuyers with little-to-no traditional credit history by focusing on the stability of cashflows based on income, assets, and expenses.
- Specialized Mortgages: Portfolio home loan products with stable income potential designed to match borrower risk profiles to investor risk appetites.
- Digital Finance: Integration with De-Fi markets to provide alternative stable liquidity channels to underserved home buyers while offering residential mortgage yields direct to digital investors.
To date, HFI has raised $500k in capital from its founders and has $0 external debt or capital.
Our executive team has decades of experience originating, securitizing, and managing portfolios of mortgage loans throughout diverse interest rate and residential real estate environments. Our team members have well-established reputations and industry connections, many of which were created while completing over 300 whole loan and mortgage-back securitization transactions over the last twenty-five years, totaling in excess of $500 Billion.
- Lisa Thomas: CEO of HFI, HD, APMC and TSM. mortgage industry entrepreneur and executive with a reputation for servant leadership, innovation, revenue generation, cost control, and continual process improvement, 25+ years’ experience in capital markets, securitization, portfolio acquisition and risk management.
- Ryan Oakley: Co-Founder and President of HD, and chief visionary. A dynamic transformational leader and driving force behind the company’s digital finance strategy with a demonstrated track record of improving operational capabilities and achieving targeted objectives within global financial services firms such as HSBC, Credit Suisse and Deutsche Bank.
- Leon Daniels: Chief Capital Markets Officer of HFI and HD, and EVP of Capital Markets for TSM. 20+ years’ experience modeling asset and bond cash flows for structured finance vehicles across a variety of asset classes, product development, pricing, hedging, and portfolio management expertise for MBS and ABS.
- Kevin Sawyer: Chief Technology Officer of HFI, HD, APMC and TSM. Serial entrepreneur with 30+ years of technology leadership and digital transformation for clients across many industries/sectors. Reputation for holistic approach to problem solving through divergent thinking, nonlinear logic, exploration and innovation.
- Brian Simons: Chief Operations Officer of HFI and HD. Successful entrepreneur and mortgage industry executive, formerly with Credit Suisse and JP Morgan, and founder of Altavera Mortgage Services LLC, a mortgage fulfilment provider, sold to Computershare (ASX: CPU), a publicly traded multinational financial services firm, licensed mortgage loan originator in 32 states plus District of Columbia.
- Riad Bacchus: Head of Delivery for HD. Digital project management with expertise in software development including custom applications, planning, analysis, design, implementation, quality assurance, and delivery execution. Well versed in traditional Waterfall, Agile development (RAD, XP, and Scrum), and Rational Unified Process.
How it works:
HD purchases loans originated by our affiliates that meet our risk-return requirements for the portfolio. The mortgages are held in our proprietary ‘revolver’ fund structure, from which we issue short-term notes in the form of digital collateral. The short-term notes offer yields tailored to meet digital investor risk-return appetites. Digital investors provide liquidity in the form of stablecoin investments (e.g., DAI, USDC) in return for real-world asset yields. At redemption, digital investor capital is returned, and investment opportunities are opened for new digital investors.
Investment Pool Parameters:
- HD plans to launch with an initial investment pool of ~1M USD, growing to 100M over the next two years, according to continued investor interest.
- Senior tranche notes issued from the loan pool with ~4-5% yields and subordinate tranche notes offered with higher risk and returns.
- HD will maintain revolving credit facilities to support mortgage acquisitions using existing credit providers such as major US banks.
- HD will leverage existing secondary market investor relationships to drive adoption and investment into the DeFi pools across senior and junior tranches in accordance with investor risk appetites.
Mortgage Asset Parameters:
The investment pool will be comprised of mortgage assets with the following characteristics:
- Average Loan Amount: ~300k
- Mortgage rates: 6-12%
- Average expected life: 7-10 years, factoring in prepayments.
- Expect Default Rate: < 3.5%
Our team is comprised of industry veterans with decades of experience in managing mortgage portfolio risk. Our risk management approach starts with asset selection, due diligence, and portfolio structuring, considering rate environments and broader macro factors. All assets will be collateralized by a Deed of Trust or Mortgage on the residential property securing each home loan. As with any mortgage-backed product, the principal risks are centered around Credit Risk driven by borrower prepayments and ability to repay the loan; Market Risk from property value fluctuation, natural disasters, etc.; Interest Rate Risk impacting new loan origination supply and payment/cashflow performance on existing loans in the portfolio; and Liquidity Risk impacting redemptions, payouts and notes refinancing. Continuously monitoring of the risk-return profile of the portfolio, and our unique revolver structure will allow us to manage the underlying asset risk as or more effectively than a traditional mortgage-backed security (MBS). Additionally, Regulatory Risk plays a factor given the likely evolution of crypto regulation globally. We continue to monitor this situation as the market develops.
We intend to be a premier provider of real-world asset yield products to decentralized finance. We are evaluating decentralized finance networks including Centrifuge and others to identify stable, high-volume platforms to support our planned product expansion. We are also engaging DeFi lending facilities with several stablecoin communities, including Maker, Aave, and Circle USDC to fund senior tranche investments. Our business development team is actively engaging our capital markets and venture capital partners to increase investment into our loans pools as well as direct equity and debt issuance to support continued business development. HD’s revenue will be based on Origination Fees: c. 1% (100bps) and a target net interest margin of 1-4% (100-400bps).
We intend to launch with an initial $1M in order to support scaling discussions with an additional $5M in investment we have lined up, with the ultimate goal of growing to a pool size of $100M.
Note: the $1 + $5M initial investments would comprise both Senior and Junior Tranche as per our investor risk / return requirements.
For more information please visit our website at https://hello.havenly.digital or contact us at email@example.com.