Capital can come from a variety of sources. Institutional Capital like large banks via an equity participation with an operator or facility lines, Hedge, Pension, Insurance, Alternative Credit Funds, Balance Sheet, Friends & Family, coupled with bank facility/warehouse lines for leverage, & correspondent or broker relationships. All of these are means to funding deal flow.

FUTURES Financial is a largely a balance sheet lender that also has Alternative Credit Funds backed by a family office, friends & family, & has strategic relationships with a regional bank & whole loan purchasers.

Not all operators have discretion over their capital. This really comes down to how an operator/lender structures their capital at the onset & with whom.

FUTURES Financial created multiple funds with a disclosed credit box/investment guidelines that in turn gives us transactional discretion.

Understanding the depth of knowledge that comprises the leadership of any organization, especially financial organizations, is critical. Having well-rounded knowledge of the mortgage industry as a whole, how capital moves through the varying sectors, the life cycle and management of MBS/loans, and the specific space of which they market too, will create best outcomes for their capital relationships as well as borrowers/clients. No marketing material can trump knowledge. 

FUTURES Financial’s founders have over 10 years in agency / conventional / government consumer loans, 7 in asset management / non-performing / performing note / loss mitigation, and 11 years in the private lending space. Together they have funded over one million transactions and over one billion dollars in volume. 

No matter how similar marketing can look, no operator can be good at all products across all asset classes. Again, it comes down to how they are capitalized as a company. If it isn’t their personal balance sheet, and they didn’t specifically raise capital to support a credit box that they themselves created, then their capital partner or relationship may have created the box of which the originator/lender must fill.

We have all heard countless times, “be yourself and don’t worry about what others are doing.” The same holds true in lending. Brands should represent a feeling associated with an experience. That feeling is based on execution or lack thereof. If we market and grab market share that our capital is not suited for, we stand for nothing. 

FUTURES Financial specializes in 1st trust deeds secured against residential and multi-family business purpose US real estate. We offer three types of transactions: purchase, rate, and term refinances, and cash out refinances with four basic products – bridge loan, value add (otherwise known to market as fix/flip loans), and ground-up construction loans.

Operators/Lenders vary from each other and although I feel that I am repeating myself, it is true. It all comes down to the demands of your capital partners – for instance if they or you require specific PNPs such as third-party vendors. Some examples of this are appraisers, credit report agencies, background checks, title insurance companies, construction oversight, contractor profiles reports, feasibility reports, draw/fund controllers, etc. 

Here at FUTURES Financial, we secure our clients, our investors, and ourselves with set PNPs. We use third-party vendors as a rule of risk management. Because it has been part of our process since we launched our organization, we have what we feel are best-in-class strategic partners that create streamlined & expedient processes. These measures do not cause delay and we are still able to close loans within 4-7 business days from receipt of appraisals, assuming full file from the borrower(s).

Exposure limits are typically created within any organization’s guidelines as another risk measure. This helps the capital provider hedge any single operator’s “exposure/risk” with one borrower (in the case of default) and prevent further hardship that could jeopardize the business’s sustainability.

FUTURES has written guidelines that a single borrower is limited to $20 million max exposure to FUTURES at any single time. Although this is the guideline, we have made exceptions based on performance and execution of strategy. 

Sustainability is maintained by liquidity and making good credit decisions on all sides of a transaction. 

At FUTURES, we run our books conservatively and underwrite with a “cautiously aggressive” approach. We maintain our values, morals, ethics, and creditability by not over-committing, and making well-informed and well-thought-out business decisions. 

Each lender/operator is different. Some have customer service groups internally or abroad, some have loan servicing groups with controls over authority, some maintain contact with all clients.

FUTURES feels the life cycle of a person’s loan is as important as the minute the client decides to choose FUTURES for their financing. We make ourselves available AS A TEAM. We have a loan servicing company as well as a construction/draw control company but we remain in conversation with the client. We are here to be of resource, even if not on a specific transaction or loan that was completed by us. 

COMMUNICATION – COMMUNICATION – COMMUNICATION. No question is too silly and the expectation for the lenders to be accountable is not too much to ask. In other words, when people invest, whether by time or resources or both, we owe it to each other to be empathetic, compassionate, grateful, and honest. Each of these things cost nothing and the only way to achieve them all is through communication. 

Our team at FUTURES believes negative news does not get better with time & good news must be celebrated. We can confidently communicate when we don’t have the answer as to what a client can expect at the time we reach out. We believe both our internal family and external client friends deserve all the information so that they can decide what is or isn’t relevant for themselves.

As we all know, in real estate, nothing ever stays the same. There is always a new cycle or “pivot.” When changes happen the client or end-user may recognize small to large differences, whether that be access to product or access to capital or both. When Covid struck the nation, it caused a massive ripple in virtually all industries, including the real estate sector, capital markets, secondary markets, and Wall Street. It forced everyone to pause and in some cases forced people out of their respective industries.

The fallout included business closures, concerns around closures, capital constraints, and more. Wall Street was no different. Coming out of the hysteria, the market rebounded to a degree but with the US carrying more debt than ever before in history and inflation at an all-time high, the feds began increasing rates. The increased cost of capital did not just pertain to a consumer, borrower, investor, lenders, and banks. All institutions, high net worth individuals, hedge funds, insurance, pensions, and so on demanded higher returns as well. The increasingly high cost of capital (relative to where we were) mixed with the high cost of doing business, consistent inflation, loss of jobs, and so much more has caused performance issues within the industry.

Once a trend of ill-performance or execution by debtors becomes an area of significance, it is customary that secondary markets and capital lenders will tighten their ‘credit boxes’ to hedge poor performance or default. This is the exact reason you have witnessed the leverage pullback by most lenders and originators.

Here at FUTURES, we may only extend you up to 75% on a purchase or rate and term refi; however, we will allow a seller carry 2nd or subordinate 2nd TD lender to come behind our lien up to 85% CLTV, for qualified sponsors. It is important for everyone in the space to note, numbers don’t lie. If you are maxing out leverage on day 1 and you intend to stabilize and refi into a longer-term product to hold, you will likely have to come to the table with the same funds that should have been required at the purchase for the next lender to qualify and approve your loan. The fact of the matter is appreciation has slowed (NOT HALTED) in most scenarios and the power is in buying right and properly balancing your capital stack for acquisition, construction or value add, and exit – DAY 1.

Futures Financial is a true ‘balance sheet lender’ with 100% discretion over our funds. We make business decisions to expand or creatively structure logical and challenging deals regularly, without putting our capital in harm’s way.

We approach every client and every deal individually while remaining true to our core values of authenticity, transparency, and execution. This is true whether we’re working with a front-end investor, borrower, broker, or capital partner. We make diligent but quick decisions that we stand by from vetting all the way through post-closing. That’s why our connections tend to turn into longstanding partnerships and friendships.

Our goal is for you to experience positive, confident, and consistent good feelings much more than a memory of a single transaction or interaction. People matter and they are the key to our success, inside and outside our organization!

The simple answer is, the Futures team doesn’t have boots on the ground in all the geos where we lend or offer financing. Also, secondary markets (should we ever decide to sell all, or some of our portfolio), require full FIRREA-compliant reports. Without getting too complicated, just as we want to make sure the people we lend to can successfully exit and/or pay off the loan we extend to them, we document our files to create a variety of options for us to remain fluid with our capital. We size ourselves just as we size each of your opportunities. We all need to have options outside of our immediate business objective today. An appraisal is one of the reports that is most widely accepted as a best representation of asset values. With this being said, we are also actively working towards an acceptable alternative.

This is a gray area for many! About five years ago, it was not a requirement at all. Fast forward to an expanded secondary market of institutions, pension funds, insurance funds, banks, and others participating in alternative credit (such as 1st TD in the business purpose space – RTL, DSCR, etc).

All of this is exciting, but more attention comes with more conservative regulation. Probably more accurately stated, the increased attention and securitizations open up opportunities for regulators to also ‘grab a piece of the action.” How do they do this? They do this by slowly placing policies or even laws with the intent to capture revenue: fees, dues, fines, or penalties.

With that said, we have and still do actively seek legal advice from a mixed group of small and large law firms for best practice. As of today, we have decided as an organization to require a broker’s license if you are in fact representing yourself as a “broker” to the borrower and charging a fee on the HUD/Settlement Statement as a “broker.” In some states, there are specific licensing requirements and physical presence requirements, such as AZ, NV, OR, ID, and UT. In all other states, we successfully work with many “referral agents” that are unlicensed. These referral agents do not represent themselves as brokers and do not collect a separate line-item fee on the HUD/Settlement Statement but instead have a written agreement with our organization.