“We’ve accepted that a certain percentage of loans, no matter how hard we work, will cancel,” Germanides said. “For example, we tied up a very complex type of deal a couple of weeks ago. It was very attractive bridge financing, extracting the cash out of the home that the borrower wanted to sell, and apply that as a down payment to the new loan. The guy was expecting much higher rates given his situation. He was overjoyed with the loan structure.
“What happened? The inspection came back, lousy. The price was high, and much more work was needed than he had thought on the property inspection. He’s like, ‘It doesn’t make sense to get out of this house for that house.’ A lot of work was done on that, but nothing came from it.”
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Bridge loans are something Germanides has been working on more. As more banks withdrew from the bridge lending business, he founded a boutique bridge lending company called Insignia Capital Corp.
“It’s our direct capital and we’re helping brokers put their clients into attractive bridge financing through a bond fund that we work with on these loans,” he said. “So we’re really excited about that business. It’s a nice complement to our mortgage business, because in the event on our direct brokering something comes up short, you can find cash in another property for those clients, depending on the kind of transaction. So it’s been very good.”
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