I would not want greater than 30% concentration in any state particularly Florida. Florida has historically been a hotbed for speculation. Well over a dozen banks failed 10 years ago for having concentrated loan portfolios in Florida real estate - I still have the FDIC emails announcing the receiverships and closures in my inbox.
That may be true in the last downturn (most issues in Florida were due to Miami high rise condo speculation), but we don’t know what the next downturn will look like. Plus, the vast difference between us and banks is that we require significant equity from borrowers and lend on construction projects that add value, and for only 12 months vs 30 years for banks, and we don’t touch Miami condos. I also know the Tampa and a couple other markets well, they are real neighborhoods, where people live and work, and Florida has seen a huge influx of population recently.
I agree it needs further thinking through and we can continue the discussion and come up with some options to think about.
I said “particularly Florida”. The 30% limit in any one state Florida or Nebraska or wherever is one of the material covenants resulting in a 3.5% stability fee. Rather than try to weaken covenants on a deal reached, if NS wants to pour money in Florida start a new pool called “Florida +” (or maybe, “Florida, Florida, Florida” RIP Tim Russert) and see what the market will demand for interest rates.
I’m not claiming to be astute on the Florida market but I am familiar with what happened in Tampa and real people in real single family homes in real neighborhoods in suburban Tampa lost $100k-$200k per home between '07 and '09.
We aren’t asking to change anything now, will continue to have discussions. As it relates to various market downturns, our view on Florida has changed. It may have been a speculative market a decade ago (and some areas may remain so, with 2nd homes in Miami specifically), but It has seen a massive influx of people and companies moving there and is becoming a strong economy. Past performance is not indicative of future results, as we saw at the start of the pandemic when everyone was forecasting a real estate downturn, that didn’t materialize, the opposite occurred.
Our strategy is to lend responsibly using multiple data points to make decisions, find the best possible borrowers and projects, we aren’t deviating from that.
Thanks again for your feedback.
@prankstr25 In case you do have access to the info, could you please point to specific federal or state requirements when it comes to “speed limits” for both nbdt and tier-one banks?
New Silver has and continues to address concerns from the community and RWF, within the framework of Centrifuge and the motions of Centrifuge toward greater functionality. New Silver has been completely transparent and forthright about abiding by agreements and progressing toward enhanced structures like an Independent Director. I know I should probably abstain but in this case I feel they have been an excellent and faithful partner and have exercised risk management within a particular niche of residential real estate using specific operational constraints. Some of these constraints were not surfaced earlier due to the newness of RWA within Maker, such as LTV/LTC/ARV vs simply LTV, and that will be addressed going forward. Also, compared to a traditional financing relationship, it is clear that New Silver views Maker as a partner and will continue to improve the relationship in an ongoing and diligent manner. 'Nuff said.
I’d recommend pulling the on-chain poll forward a week in this instance. I understand that New Silver would like to see this resolved as quickly as possible.
I’m happy to support changing the end-date to 2021-07-08 in this instance for the following reasons:
- Solid amount of participation in the signal poll so far.
- Very few ‘No’ votes in an absolute sense.
- Solid ‘yes’ vote relative to ‘no’ vote, even considering votes from newer accounts.
- Discussion has been both respectful and generally positive from all involved.
- Relevant parties have commented (author, core unit personnel, centrifuge people, RWA co.)
@prankstr25 if you agree, please respond and make the change to the initial forum post to reflect the updated timeline.
Sure, thank you. I will update the post today.
This is on-chain now, here.
The exec containing these changes is now live in the voting portal.
Please help on passing this quickly by adding your voting weight to this, as we Debt Ceiling is already reached
The executive proposal containing these changes passed sucessfully.
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