“We absorb the risk during the construction period,” Krohn says. “We’ve been working with insurance companies for as long as I can remember. They understand the real estate business and they’re good underwriters.”
At Fidelity, Mueller works in partnership with independent loan companies that include asset-based lenders. “We may find a transaction that’s close to what we want, but that involves a company that has insufficient capital to meet their business objectives in relation to the debt they have,” Mueller says. In that case, Fidelity might refer the customer to an asset-based lender such as Prinsource. The nontraditional lender writes the loan; Fidelity gets the customer’s deposits.
Eventually, Fidelity may take over the loan. “I may buy a piece of the loan they write. I’ll get to know the customer, watch the customer, and ultimately take over the whole deal,” Mueller says. Plus, Fidelity joins with the asset-based loan company, providing some of the capital it needs to make the deal.
Even with help from partnerships, though, nontraditional lenders have changed the landscape of lending. “We have to keep changing to meet the needs of the consumer,” Mueller says. “All of us have had to work to figure out the cheapest, most effective way to deliver capital. Isn’t that how the market is supposed to work?”
