When federal regulators cautioned banks a few months ago about loading their portfolios with too much debt secured by real estate, the warning created opportunity for other lenders.
Reno-based Equity Lending Partners is among the companies stepping into the breach that's left as some banks slowly reduce their exposure to real estate borrowers.
Equity Lending Partners, a newly created subsidiary of IntoHomes Mortgages Services Inc., expects to finance more than $10 million in additional projects in northern Nevada by the end of the year.
While the subsidiary is new as a separate company, IntoHomes has been involved in channeling money from private investors into development deals and land purchases for years, says IntoHomes President Tom Powell.
The decision to create Equity Lending Partners, he says, reflects the nationwide expansion of the residential mortgage business of IntoHomes.
"These really are two separate businesses," he says.
Spurring the creation of the subsidiary, Powell says, is the opportunity in the current market both on the lending and the borrowing sides of the equations.
Charlie Edgington, the business development manager for Equity Lending Partners, says the company is tapping the interest of investors who want more growth than they get from a slowing stock market and also want secured investments.
The company has found particular success, she says, among retired investors with self-directed Individual Retirement Accounts.
Unlike others in the private-funding business, Equity Lending Partners doesn't pool investors' money into a common fund to finance deals. Instead, it matches up its investors with individual loans a cautious, one-at-a-time sort of financing.
Investors' annualized returns typically run 10 to 13 percent and typically are secured by first or second mortgages on the properties.
The downside to one-at-a-time deals: There's no promise that Equity Lending Partners can keep investors' money at work when the current loan matures. Investors, who put up a minimum of $50,000, may find themselves with cash on the sidelines.
The company's caution is seen, too, in the deals it seeks out.
Edgington, Powell and other executives focus on northern Nevada loans where they can see the land and get to know their borrowers personally. Ideally, it seeks near-bankable loans deals whose quality falls only a hair's breadth away from the standards set by commercial banks.
"It's truly make-sense lending," says Powell.
The company's primary niche will be loans of $3 million to $5 million. Anything smaller, Powell says, becomes so burdened with paperwork that it's tough for Equity Lending Partners to turn a profit from its fees on the deal.
But more important, he says, the $3-million-to-$5-million niche in northern Nevada is one in which the company's executives are experienced and comfortable.
