Innovators Help Home Builders Fill Financing Vacuum

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New sources of equity investment capital are stepping in to fill the breach as investment and commercial banks retreat from builder credit lines, and new mortgage lenders are emerging, unburdened by toxic loan portfolios

January 01, 2009

Builders desparate for new sources of capital are turning to new kinds of private investment sources. Pensco Trust Co., chartered in New Hampshire and headquartered in San Francisco, is one companay making this opportunity work for builders.

Pensco administers more than $3.3 billion in retirement assets. “We can't directly promote any particular investment,” says CEO Tom Anderson, “but we link to Web sites where builders can post information about projects. Two new portals have just launched within the last 60 days: and”

“Our clients can invest in anything except life insurance, collectibles and the stock of subchapter S companies,” Anderson says. “Everything else is free game, including real-estate. They can extend loans to builders or do joint ventures to share in the profits from a project.”

MetLife Joins Mortgage Lending

Early last fall, MetLife acquired First Horizon's mortgage business and converted it into MetLife Home Loans, now headquartered in Dallas. “We're part of MetLife Bank, which is out of Bridgewater, N.J.,” says Senior Vice President Dan Schmidt, who runs the national builder division. That division is already creating new programs, such as rate buy-downs, to help builders sell houses.

“We just rolled out a new offering of jumbo loans,” Schmidt says. “MetLife is in a great position because there's nothing in its portfolio that's toxic — no subprime mortgages or construction loans on failed projects.”

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