How would you describe current economic and real estate market conditions? Everyone is comparing the current financial and real estate situation to the mortgage meltdown of 2008. But today’s conditions are completely different. Yes, we may be facing an economic downturn, but previous downturns stemmed from a loss or depreciation of assets, while this market shift was sparked by a nationwide health crisis and resulting job losses. This market uncertainty caused Wall Street to pull back or cease purchasing loans they previously were acquiring at a premium from lenders like CIVIC. As a leading private money lender, however, CIVIC was well-positioned to weather this storm of uncertainty. We are well-capitalized and have very strong relationships with Wall Street. We remained aligned with our capital partners to ensure we could continue offering financing solutions needed in the marketplace. Our capacity to fund both bridge and rental loans is as strong as ever. Why does this affect the real estate investor market? Overnight, many lenders that built their business selling to institutional capital sources, REITs or hedge funds were forced to hold on to recent originations either on their balance sheet or on expensive warehouse lines. While this is fine in theory, many lenders didn’t have the liquidity available to do this, much less the liquidity needed to fund new originations. In addition, warehouse lenders also paused, reassessed their positions, and many in our industry faced margin calls that needed to be met in an extremely short period of time. Since many lenders didn’t have liquidity to meet the large margin calls, especially without the ability to turn their capital, what was initially just a health crisis became a liquidity issue. What does all this mean to real estate investors, lenders and loan originators? Lenders had to quickly decide whether they had to pause or pivot to remain in the game. Companies like CIVIC had to make adjustments such as lowering leverages, raising interest rates and placing some bumpers on our loan guidelines. CIVIC remains a very well capitalized company. Our loans are still performing today just like they did in January and February. How did your customers react to the pivot? The initial reaction was difficult, but we’ve adjusted a bit as Wall Street’s concerns and fears have abated. We have been 100% committed to our customers throughout the pandemic and have been focused on being consistent, trusted financial partners. In fact, we recently received the highest monthly Net Promoter Score in our company’s history, and today our pipeline is as strong as it has ever been. What is the biggest challenge CIVIC is experiencing today? I think the biggest challenge is the fact that, until we have a vaccine in place, there is no known end in sight. So we need to remain diligent and adaptable to be able to shift as needed. CIVIC is very well-positioned to do that. Have there recently been any positive developments? Yes. First and foremost, the real estate market continues to be robust. As a result, Wall Street has resumed interest in acquiring these products. Even more exciting is that the industry has adapted to the “new norm” of constant change and is thriving—whether it be working remotely and moving services to a virtual delivery model, or capitalizing quickly on new opportunities. What advice do you have to offer from this experience? As an Originator one of the most notable opportunities for our team has been the ability to create strategic partnerships that bring value to each other. None of us are exempt from the current or future economic setbacks. So it is imperative we link arms with great partners and recognize the opportunities we can still capture, as we are stronger together. I would also say that during tough times, the values you commit to as an organization become critical. I believe that CIVIC’s core values of being a great partner and acting with honor have given us a lift and will keep us strong as we navigate through unchartered waters in the coming months.
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