Q&A with Jennifer McGuinness, President of Invigorate Finance
Starting a New Chapter and Looking Ahead
REI INK had the opportunity to interview Jennifer McGuinness, the president of Invigorate Finance, a newly formed partnership between Mortgage Venture Partners and Fay Financial.
McGuinness brings over twenty-five years of lending and aggregation, banking, asset management, servicing, securitization, and structured finance experience to Invigorate Finance. Most recently, she was the Founder and Head of Aggregation & Structured Finance for Mortgage Venture Partners. She is also the Founder of Strategic Venture Partners. Both Mortgage Venture Partners and Strategic Venture Partners were named 2020 Top 25 FinTech Innovators.
Q: You recently announced a new chapter with Invigorate Finance. Why did you decide
to partner with Fay as opposed to staying on your own with Mortgage Venture Partners (“MVP”)?
A: Both MVP and Invigorate Finance are closed loan mortgage conduit aggregators. Under the MVP structure, we were solely able to offer delegated correspondent aggregation. But with Invigorate Finance, we will also shortly launch a non-delegated correspondent channel. In addition, generally lenders face two really big challenges: (1) the cost to originate is expensive and (2) servicing transfer is difficult and can cause significant “noise” for their customer leading to, for example, a less than desirable customer service experience when they make their first payments or take their first draw on a line of credit. I have known Ed Fay a long time and he has done a good job building a services business that I believe will add significant value for certain Invigorate Finance clients. This partnership allows for us to deliver a quality of service that no other aggregator can match. Invigorate Finance truly offers complete solutions and is a real partner for lenders and investors alike. We are not merely a “take out”.
Q: How do you work with Lenders to increase production without sacrificing customer service?
A: Entities that are solely in the aggregation business to flip loans to other investors will make a little money standing in the middle, but they tend to outsource everything. When a lender deals with an “outsourced” aggregator there is a general lack of consistency in standards and practices, which is important because it can impact how loans are underwritten and whether exceptions are prudently assessed, for example. This is not the Invigorate Finance business model. Invigorate Finance does not outsource the operational features of its business, such as credit; hence the lender truly builds a relationship with us that is based on knowledge and that is how a business thrives. At the end of the day, Invigorate Finance is a customer service driven business. If the lender is working on an exception when underwriting a loan, they are going to be working with our internal team; if they are working to clear a condition before we purchase the loan they will be working with our internal team. We do not ask vendors to run our business for us. We run our business and that creates true rapport with our lender partners and investors.
Q: Whenever you take a new step in your career it seems to be to invent something. Why is that?
A: I think it is less about inventing things and more about the enjoyment of taking on a challenge that, if achieved could bring the market forward or enhance access to credit. I also love to learn new things or grow aspects of my knowledge base further. Throughout my career I have been very lucky to have been given the opportunity to truly build and run the full lifecycle of origination, asset management, servicing and structured finance, and have done so in lenders, banks, aggregators, hedge funds and REIT’s. I believe this background allows me to look at an opportunity from all sides rather than from only one “silo” and therefore provides me, our team, our lender partners, and investors with optimized outcomes. Now, it is important to note that I have not done any of the things I have achieved alone. I have been blessed with great mentors and team members over the years and it is their achievement as well as my own.
Q: You are making a push to solve some of the supply problems we are seeing in the single-
family rental space through aggregating new construction lines of credit—explain your thinking here.
A: When looking at the market today, the biggest challenge I see initially is that demand does outweigh supply if you are solely looking at “for sale” real estate and mortgage rates. The demand of the homebuyer, coupled with the demand of the institutional investor, continues to drive home prices up in many markets. This, hand in hand with record low mortgage rates, has well positioned home buyers to make better purchase offers which could result in lower investment returns for investors, should they have to increase “buy prices” to acquire additional real estate. Single Family housing starts have increased by over $1.2 million in November 2020 per the Census Bureau which is more than a 25% increase from 2019. While a lot of the new construction will go to owner-occupants, this significant addition of new homes will begin to equalize the lack of supply for investors. By offering new construction lines of credit we are funding what is necessary to effectuate the build of the homes to actually help that demand be put to work.
Q: Where do you think the market is heading?
A: Now that the broader market has begun to equalize, the non-QM and non-agency markets are both starting to rebound. In addition, with recent announcements from the GSEs, there are additional opportunities opening up for non-agency segments of the market. For example, the 7% saturation for non-owner-occupied properties really does create opportunity for other lending programs to pick up additional volume to service this customer base. Good examples are our 1st lien HELOC, our 1st lien jumbo and our non-QM 1st lien programs—they all have applications for second homes and non-owner-occupied dwellings. The obvious follow up question is, “Will that create different asset classes and will people start to buy things like non-owner-occupied agency-eligible loans?” And the answer is, while people are buying these loans today, I do not think that it is going to create a non-agency asset class or lead to a material surge in buying these loans. In my opinion, the lenders will look for better priced asset execution than what the market will be willing to pay for these loans long term.
Q: What is the biggest change you have noticed in our business since you started 25 years ago?
A: Well, the first trading desk that I ever worked on still had cigars and bourbon on it! You absolutely do not see any of that on Wall Street trading desks today. But the biggest change in 25 years has definitely been the evolution of technology and the rise of FinTech, both of which have been good for the market overall and clearly “tech forward” is where things are headed. It is important to note that the most successful technology solutions have come from those with solid financial business knowledge at their core or those that have partnered with skilled market expert advisors. I have always tried to combine deep industry knowledge with a tech-forward approach and that is how Invigorate Finance is structured today. MVP was named a 2020 Top 25 Fintech Innovator and I plan to build on that with Invigorate Finance.
