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Company Spotlight

Creating a Best-in-Class Experience

Building a New Wholesale Broker Paradigm by Ezra Dweck and David Jacob IceCap Group is one of the largest private money lenders in the country providing business purpose loans for both short-term bridge and long-term fixed rate rental loans for 1-4 family, 5+ multifamily, and mixed-use real estate properties. IceCap Group is institutionally managed and backed by a family office with a 30+ year history of successfully investing in real estate. In March of 2023, IceCap Group launched the BluFin Group as its new wholesale origination channel to extend its capital resources to a nationwide broker network. In tandem with the BluFin Group, a streamlined, tech forward, and client-service-focused platform was developed to support this network of brokers by offering alternative debt origination and funding solutions through unapparelled expertise. The firm immediately began expanding wholesale lending operations and closed its first wholesale division loan on June 2, 2023. IceCap Group had developed a burgeoning broker business prior to the launch of BluFin, but after seeing the competition in the marketplace, they realized that there were inefficiencies that needed to be addressed. To cure this void, they went out and sought additional talent by identifying the right team in Thomas DeMartin, Dalton Harben, and Chad Saunders. With a long pedigree in the wholesale market and closing thousands of successful broker transactions prior to joining IceCap, they knew firsthand what was absent in the processes of other lenders. The new partnership was a seminal moment for Ice Cap arising from a vision of excellence born out of opportunity realized from vast combined industry experience. The firm is presently constructing a best-in-class, one-stop lending solution for investor financing by breaking down barriers and offering solutions to various challenges plaguing this industry and markets. This solution includes enhancing the broker and consequently, borrower experience, by providing full transparency, self-service technology, and common-sense underwriting guidance. Credit and underwriting departments often achieve a bad reputation and are viewed as a necessary evil by those in production; however, BluFin has flipped the script by combining the forces of production and credit to achieve a common goal: a clear path to closing. It is not just all about closing, though. How a broker and lender partnership arrive at closing is often neglected by industry competition, leading to nail biters, head scratchers and often times painful experiences. BluFin’s approach is to fill the gaps and refine the process. The firm focuses on the total experience by offering a streamlined and problem-solving approach to achieve a closing and impart a legacy experience that maintains broker retention well above the industry norm. A Unique Capital Base and Experienced Team While many competitors and brokers might say BluFin and all of its capabilities sound great, they might also feel they have heard this similar type of message from other lenders in the private lending space. Despite IceCap’s firm belief that it has created a new lending paradigm for the broker community which should be experienced by all brokers and borrowers, the firm also believes it offers the industry a unique capital base which enables BluFin and IceCap to be more than just a “sell everything” conduit. Aside from access to the traditional bridge and term note buyers, the firm offers a sophisticated departure from the norm in managing three different internal debt funds in addition to an insurance fund and extensive access to the securitized markets. By lending the firm’s own capital, IceCap can focus on both “conduit” type originations and discretionary deals that offer attractive risk-adjusted returns for the firm’s dedicated funds. This includes multifamily and mixed-use bridge loans, ground-up loans and five-year term loans, allowing the firm to serve a diverse range of client needs. The coupling of prudent lending standards and innovative technology ensures that the firm can remain agile and focused, while providing brokers with consistent and reliable lending solutions. The past four-plus years since COVID have been anything but stable and smooth sailing in the real estate lending space especially as interest rates and cap rates moved appreciably higher. The industry has seen many lenders disappear, capital standards tightening and now the GSEs are cracking down on bad actors, especially in the title industry. While all of the above has been occurring, IceCap continued to lend and has expanded its capital base without suffering any real credit stress on its discretionary or sold loan originations. The firm abstained from overly aggressive lending practices which had unintended consequences across the competitive landscape. Much of this success is grounded on a strong leadership team with real estate equity and lending backgrounds combing decades of Wall Street experience with entrepreneurial hustle. Empowering Brokers for Success BluFin’s mission is to expand on IceCap’s explosive growth in this space by leveraging the capital base developed by a trail blazing team of experienced finance executives. This is accomplished by extending Ice’s diverse suite of flexible funding solutions to a network of brokers that were ripe for something more refined and empowering for their client base. A critical component to this is market-based pricing through its wide array of counterparties, including alternative asset managers, private equity firms, and insurance companies keeping them nimble and consistently ahead of price moves. IceCap is not beholden to any one capital source which many other lending outfits are subject to as consolidation has increased in the private lending space. IceCap counterparties provide a clear vision of the overall market which is then extended to its clients daily using a self-service full-process platform. The firm offers no origination fee loans and provides raw par pricing with the ability to earn yield spread premium or buy down interest rates. Fees are vastly different across the competitive landscape and often overlooked by lending partners. BluFin observed various areas to reduce fees across product lines without sacrificing service and capabilities. It has lowered underwriting fees, cut the junk, and allowed brokers to earn more while saving their client’s money which is a crucial component to winning more business in the investor

Lending

Enhancing Lending Solutions

New Integrations in Liquid Logics Platform By Sam Kaddah In the fast-paced world of private lending, efficiency, security, and reliability are paramount. Private lenders need robust tools to streamline their processes and mitigate risks. Borrowers seek a seamless experience, while investors demand transparency and security. Liquid Logics, a leader in lending solutions, is excited to announce two powerful integrations into our platform: construction fund control and risk management analytics and background screening services. These new features are set to revolutionize the loan origination process, bringing enhanced security, reliability, and efficiency to private lenders, borrowers, and investors alike. Construction Fund Control: Ensuring Financial Oversight and Transparency One of the most significant challenges in construction lending is managing the disbursement of funds. Ensuring that funds are used appropriately and that construction projects stay on track is critical to minimizing risk. The integration of construction fund control into the Liquid Logics platform addresses these challenges head-on. With construction fund control, private lenders can maintain meticulous oversight of how funds are allocated and used throughout the construction process. This crucial functionality provides detailed tracking of each disbursement, ensuring that funds are released only when specific project milestones are met. This level of oversight helps to prevent misappropriation of funds and ensures that projects are completed on time and within budget. Increased transparency and accountability benefit both borrowers and investors. Borrowers can see precisely when and why funds are released, fostering trust and collaboration between lenders and borrowers. Investors, on the other hand, gain confidence knowing that their investments are managed responsibly and that projects are progressing as planned. This transparency is crucial for maintaining investor trust and encouraging future investments. Risk Management Analytics: Proactively Identifying and Mitigating Risks Risk management is a cornerstone of successful lending. Identifying potential risks before they become issues can save lenders significant time and money. Risk management analytics equips lenders with powerful tools to assess and mitigate risks effectively. Risk management analytics leverages advanced algorithms and data analytics to evaluate potential risks associated with each loan application. By analyzing a wide range of factors, including borrower creditworthiness, project feasibility, and market conditions, lenders have a comprehensive risk profile for each loan. This proactive approach enables lenders to make informed decisions and take preventive measures to mitigate identified risks. Once a loan is approved, continuous monitoring is essential to ensure that emerging risks are identified and addressed promptly. The risk management analytics integration offers real-time monitoring of loan performance and market conditions. Lenders receive alerts and insights into any changes that could impact the loan, allowing them to take swift action to mitigate risks. This dynamic risk management approach helps protect lenders’ interests and ensures the long-term success of their lending portfolios. Background Screening Services: Enhancing Security and Reliability Trust is the foundation of any lending relationship. Ensuring that borrowers and other stakeholders are trustworthy and reliable is crucial for maintaining the integrity of the lending process. Background screening services provide lenders with the tools they need to conduct thorough due diligence. The background screening services integration enables lenders to perform comprehensive background checks on borrowers, co-signers, and other key stakeholders. These checks include criminal history, credit reports, employment verification, and more. Through thorough due diligence, lenders can identify potential red flags and make more informed lending decisions. In addition to verifying the reliability of borrowers, background screening services play a crucial role in fraud prevention. By cross-referencing information and identifying discrepancies, the platform helps to uncover potential fraud schemes before they impact the lending process. This enhanced security measure protects lenders from fraudulent activities and ensures that only trustworthy borrowers receive funding. Streamlined Processes and Improved Efficiency The integration of construction fund control, risk management analytics, and background screening services enhances security and reliability and significantly improves the efficiency of the loan origination process. All new features seamlessly integrate into the existing Liquid Logics platform, providing a unified and user-friendly experience. Lenders can access construction fund control, risk management analytics, and background screening services, streamlining their workflows and reducing the time and effort required to manage loans. Automation is a critical component of the new integrations. The platform automates many of the tasks associated with fund control, risk assessment, and background screening, reducing the burden on lenders and speeding up the loan origination process. By automating routine tasks, lenders can focus on more strategic activities, such as building relationships with borrowers and investors and growing their lending portfolios. A New Era in Lending Solutions The integration of construction fund control, risk management analytics, and background screening services into the Liquid Logics platform marks a significant milestone in the evolution of lending solutions. These new features bring unparalleled security, reliability, and efficiency to the loan origination process, benefiting private lenders, borrowers, and investors alike. Private lenders can now enjoy enhanced financial oversight, proactive risk management, and comprehensive background checks, all within a single, user-friendly platform. Borrowers benefit from increased transparency and trust, while investors gain confidence in the responsible management of their investments. At Liquid Logics, we are committed to providing innovative solutions that address the evolving needs of the private lending industry. The new integrations are a testament to our dedication to enhancing the lending experience for all stakeholders. Contact us today to learn more about how these powerful new features can transform your lending operations and drive success in the competitive world of private lending. Staying true to our mission and dedication to continue to be the industry leader addressing the ever-evolving needs of the private lending industry, Liquid Logics is releasing a suite of tools and key integrations. Our clients are now able to perform real-time live background checks, asset, and account statement balances, draws, and fund controls through AI, as well as KYC, OFAC, and identity verifications. As the industry’s needs evolve, you can rest assured that Liquid Logics tools will keep up with your needs. SIDEBAR Liquid Logics is a Founding Member of the National Private Lenders Association. Join us for the NPLA Conference

Finance

Building the Future

The Digital Transformation of Construction & Renovation Finance By John Ryan A digital transformation is coming quickly to the construction and renovation lending industry. Two main catalysts have contributed to this emerging shift — the rapid advances in technology and an influx of private capital seeking to fill the void left by the regional bank system pullback. Business leaders and staff are using this period of higher interest rates to invest in operational efficiencies, data driven risk management, and the client experience to scale more safely and keep costs in check ahead of the next cycle. Even now with interest rates high, industry estimates of the full residential construction, renovation, and bridge lending wallet are around $450B annually. That number can be debated and broken down by business line, asset type, what’s addressable, lender type, etc. but in the end one thing is clear, there is considerable opportunity. In order to capitalize on this opportunity, lenders are embracing technology that will revolutionize the way construction funds are managed, from enhancing the precision of risk analysis to streamlining communication among stakeholders. By adopting digital platforms, the industry can move away from its reliance on outdated methods and shift toward a future where financial decisions are data-driven, timely, and more secure. The regional bank retreat was not merely a reaction to immediate financial pressures, it also reflected a broader reassessment of risk and return in the construction sector, historically viewed as high-risk by financial institutions. But now technology can help mitigate some of the age-old fears of construction lending and be a tool for the continued institutionalization of the industry. And private money lenders have been first movers to act and we are now seeing a tremendous influx of private capital into the housing construction and renovation sector where it is desperately needed. As a lender considers undergoing a digital transformation, it is critical for the key stakeholders to understand the industry landscape today, where it’s going, and how to get started on making a decision on which technology solution is right for them. The Current Technology Landscape Today, the industry is served by a host of Loan Operating Systems (LOS) which primarily focus on loan structuring. This includes the upfront ingestion of a loan, document management, and ongoing data exchange with servicers. A few long established, proficient vendors and a swath of homegrown systems serve the market needs. Borrower portals are either non-existent, embedded in the LOS platform, or again, homegrown technology with varying degrees of borrower adoption. Once a loan is approved, the bulk of construction and renovation loans are managed through a complex web of spreadsheets, emails, and text messages. These manual processes are opaque and hard to scale, posing significant operating challenges including a lack of efficiency and transparency often leading to delays, cost and staffing overruns, and the inability to capitalize on potential opportunities for innovation and growth. A traditional non-digital approach to construction fund-control also increases key-person risk and intuition or “gut feelings” rather than data-driven insights. While large-scale projects may benefit somewhat from structured processes like the G702 forms, smaller residential construction and renovation projects lack standardized procedures, leaving them vulnerable to inconsistencies and inaccuracies in budget monitoring and risk assessment. Tech-forward and well-capitalized lenders may build internal systems to manage the workflow with their clients. The results may serve the lender well, however it’s important to note lenders bear the upfront cost of development and ongoing opex related to technology ownership and staffing and therefore are spending time and resources for non-core competency business. Further, most home-grown workflows are internal staff focused and do not tackle the more challenging aspects of providing a well adopted self-service program for customers with high borrower satisfaction. Other lenders use older technology or captive software systems provided by inspection companies. However, actual decisioning and customer experience typically remain in offline spreadsheets where staff are still inputting draws on the behalf of borrowers. Lacking a true auditable transaction flow, over-disbursement errors can still occur. The broader construction and renovation lending ecosystem also involves numerous stakeholders, including lenders, note buyers, warehouse lenders, borrowers, contractors, and government entities, each with their own preferences and requirements. Aligning these diverse perspectives requires extensive communication and decision-making, potentially leading to inefficiencies and delays. Technology provides the architecture to streamline this system. Thankfully, private lenders and their capital partners are leading the charge in demanding innovative, off-the-shelf construction portfolio solutions and technologies to enhance risk controls, streamline lending processes, and leverage data for predictive analytics and reporting. Embracing a technological edge naturally improves the client experience, adding to the many reasons professional real estate investors and developers favor private lenders. What Does the Future of Construction Finance Look Like? The future is digital. At TrustPoint, we offer the construction and renovation lending industry a modern SaaS platform to streamline operations through our smart, purpose-built workflow. Our proprietary technology takes unstructured data and structures it to enable our innovative data-driven portfolio risk management and analytics. Our solution includes auditable fund control, integration with third party vendors, project health scoring, predictive insights into loan performance, cash forecasting visibility, and much more. The platform’s technology leverages the latest in artificial intelligence to analyze vast amounts of data in real-time, enabling lenders to assess the risk and viability of construction projects with unprecedented speed and accuracy. The integration of AI-powered decision engines into construction finance platforms represents a significant leap forward in how financing decisions are made. This exciting journey has only just begun. It is essential to evaluate your return on investment (ROI) when evaluating the cost of adding technology. TrustPoint’s returns come from improved scalability, auditability, and decision making with granular budget tracking, integrated inspection, approval, risk-scoring, and more. Lenders experience higher customer satisfaction (TrustPoint has an 86 NPS) and reduced support load with a highly utilized borrower portal (89% of borrowers self-service through our platform) and real time transparency into request status. They gain enhanced visibility and performance insights for leadership and investors with portfolio

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