Our investment goals have two parts:
- Repackage whole mortgage loans into portfolios designed to generate income, and strive to reduce risk through collateralization
- Make portfolios available to investors through financial advisors
The housing crisis has brought new attention to a $2.2 trillion asset class: whole mortgage loans.
- Perception is reality Weak underwriting and negative perceptions about real estate have strongly contributed to the downward trend in mortgage lending
- Need for liquidity Confronted by weak demand, banks have also been under pressure to sell their residential mortgages to raise liquidity
Believing that downward price pressure on mortgages will continue for the near- to mid-term, Vertical Capital believes that the next half-decade presents substantial opportunities to buy quality whole mortgage loans from financial institutions at deep discounts.
The average investor or financial advisor, however, should proceed with caution in this sector of the investment marketplace. Real estate-related investments have risks that include a high degree of uncertainty relative to market competition, interest rates, delinquency and foreclosure. Risk factors of this investment type involve some speculation and the potential for total loss of investment principal. Additionally, there is a lack of liquidity due to the fact there is no secondary market.
