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CHM, which was founded in 1993, is licensed to lend in 26 states through its 25 retail offices and its wholesale channel. As part of the transaction, Mario De Tomasi, Chief Executive Officer of CHM, has joined the executive team of The Capital Corps. Mr. De Tomasi and CHM Founder Scott Simonich have also become strategic investors in The Capital Corps.
Steven Sugarman, Founder of The Capital Corps, stated, “We are thrilled to work with Mario, Scott and the Commerce Home Mortgage team. CHM is a strong lender that works on behalf of its employees, borrowers and partners. This transaction will allow The Capital Corps to become the leading lender for underserved, prime homeowners. We now expect our home mortgage originations to exceed $2 billion next year.”
The Capital Corps’ will offer proprietary lending programs through CHM. The Capital Corps target borrowers come from the 27% of the U.S. population the FDIC identifies as underbanked who are unable to obtain loans from banks due to overly burdensome or technical documentation requirements that do not reflect on the borrower’s true credit-worthiness. These non-traditional borrowers too often are forced to use subprime and hard money sources to finance their prime credit needs due to their inability to access traditional sources of capital. The Capital Corps programs and solutions that will seek to address the needs of these non-traditional prime borrowers are expected to launch during the first quarter of 2018.
Jeffrey Seabold, co-Founder of The Capital Corps, stated “I have been impressed with Commerce Home Mortgage for quite some time and I look forward to helping CHM realize its goal of becoming the home for the best brokers, originators, and partners in the industry.”
Seabold continued, “We expect Commerce Home Mortgage to become the preferred lender for non-traditional prime borrowers. We now have the platform, relationships, and team to address this significant market void effectively.”
Mr. De Tomasi stated “Over the past 25 years, CHM has provided a strong platform for loan officers to serve the needs of diverse homeowners. By joining forces with The Capital Corps, we will now be able to offer proprietary programs on our platform which will enable CHM to grow its business more quickly and prudently. I am excited to partner with Steven and Jeff and welcome both of them to the Board of CHM. Likewise, I am thrilled to work with Faith Bautista and the National Diversity Coalition as CHM continues to finance the dreams of America’s diverse populations.”
National Diversity Coalition President Faith Bautista, who serves as Chair of The Capital Corps’ Community Advisory Board, stated that “I am thrilled to partner with Commerce Home Mortgage – a company that understands and implements effective corporate responsibility and community development activities. Our membership is eager to support CHM and its brokers to increase access to capital to credit worthy borrowers of underserved communities. We look forward to connecting Commerce with banking partners and others who can help develop the products to better serve underserved communities.”
About Commerce Home Mortgage, INC
Commerce Home Mortgage, Inc. was incorporated in 1993 and is based in San Ramon, California. CHM originates home mortgages through its 25 lending offices located in California, Arizona, Colorado, Florida and Georgia. It provides home mortgage financing services and offers conventional loans that include fixed and adjustable-rate mortgages. CHM also provides government loans that include federal housing administration loans; VA home loan that are used for various different purposes, including purchasing or building a new home, refinancing a current mortgage, repairing or improving existing home, or installing home efficiency measures; and U.S. Department of Agriculture loans to farmers and other qualified borrowers with low to moderate incomes. In addition, it offers jumbo loans for large or luxury properties; reverse mortgages and loans for foreign nationals. For more information: http://www.commercehomemortgage.com/
About The Capital Corps, LLC
The Capital Corps, LLC empowers diverse small businesses, entrepreneurs and homeowners to pursue their dreams by expanding access to prime capital for non-traditional borrowers. The Capital Corps focuses on lending secured by residential real estate and provides credit counselling services to its borrowers. The Capital Corps has partnerships with the National Diversity Coalition and the National Asian American Coalition and community leaders to actively participate in the lending process through their Community Advisory Board to ensure its lending programs appropriately reflect the needs of the communities it serves. The Capital Corps’ team is led by its Founders Steven Sugarman and Faith Bautista and co-Founder Jeffrey Seabold. For more information: http://www.thecapitalcorps.com
About The National Diversity Coalition
The National Diversity Coalition is an official 501(c)(3) tax-exempt organization which is comprised of community organizers, faith-based leaders, nonprofit directors, and business owners working collectively for greater financial equality and empowerment for underserved groups. Together we work with corporate and government leaders to advocate for greater opportunities in homeownership, small business, and financial literacy for all people.
About The National Asian American Coalition
The National Asian American Coalition is a 501(c)3 Non-profit Organization, a HUD Approved Home Counseling agency and an IRS approved VITA site. Our primary mission is to empower twenty million Asian Americans and two million Asian American small businesses to become a national economic powerhouse. The NAAC is the nation’s leading Asian American nonprofit advocating against foreclosures, advocating for greater economic and small business development and in advancing the growing economic and social power of Asian Americans. For more information: http://www.naac.org/
• Prime lender to expand access to capital for homeowners and small businesses, including those with non-traditional credit needs unable to borrow directly from banks.
• Announces leadership team led by former Banc of California executives Steven Sugarman (Founder, Chairman, CEO), Jeffrey Seabold (co-Founder, Vice-Chairman, Chief Banking Officer), Paul Simmons (Chief Credit Officer), Thedora Nickel (Chief Administrative Officer), Janet Hargreaves (Management Information Systems), and Raquel Gillett (Financial Controls).
• Announces community advisory board led by Faith Bautista (CEO, National Diversity Coalition (“NDC”) and National Asian American Coalition (“NAAC”)), Jin Sung (Chair, NDC), Jeff Lim (Co-Chair, NAAC), Pastor Mark Whitlock (COR AME Church), and Gil Vasquez (Chair, Los Angeles Latino Chamber of Commerce).
LOS ANGELES--(BUSINESS WIRE)--Founders Steven Sugarman and Faith Bautista announced today the launch of The Capital Corps, LLC (“The Capital Corps”), a California based financial institution focused on providing access to capital to diverse homeowners and small businesses, including those with non-traditional prime credit needs currently unserved by banks and traditional financial institutions. Mr. Sugarman and Ms. Bautista will be joined by co-Founder Jeffrey Seabold and an experienced team of bankers and lenders to serve this marketplace. Additionally, The Capital Corps made the following announcements today:
“The launch of The Capital Corps is the realization of a commitment I was proud to announce alongside President Clinton, Mayor Villaraigosa, and the California Reinvestment Coalition in 2015. We pledged to collaborate with community leaders to create a lending platform focused on providing access to capital to credit-worthy borrowers who need it most. Our goal was to reshape lending under the Community Reinvestment Act to be more impactful to underserved communities with better risk adjusted returns for banks. It gives me great pride today to make good on that commitment.” Said Mr. Sugarman.
Mr. Seabold stated, “The Capital Corps will focus on ensuring its lending platform is scalable, financially strong and the leader in non-traditional prime lending. We seek to meaningfully expand access to capital to the over $100 billion of diverse borrowers that are currently unserved by banks.”
To ensure The Capital Corps has robust financial strength and stability, we will seek certification as a community development financial institution by the U.S. Department of Treasury and membership with the Federal Home Loan Bank of San Francisco.
Mr. Sugarman continued, “Employees, borrowers, and the diverse communities we serve must know that their lenders will be there to finance their homes and businesses during all seasons and all cycles, and will not cut and run over short term pressures. The Capital Corps team has demonstrated their commitment to the communities we serve over the long haul. We have set up our governance and structure to maximize our ability to serve all borrowers safely and soundly for decades to come. We couldn’t be more excited to be recruiting partners – capital, community, employee, and strategic – who are authentic, passionate, and mission-driven.”
Founder Faith Bautista, Chief Executive Officer of the National Diversity Coalition, remarked: “I have worked for years to find ways to encourage hundreds of banks to expand their community development efforts to low income and minority communities that are left out of the system. Steven Sugarman was the rare bank CEO who found innovative ways to help our members while ensuring his bank was protected and profitable. That is why he was the first banker who earned the National Diversity Coalition’s highest honor: The Giraffe Award. The award is given to the person willing to stick their neck out for the benefit of doing the right thing for the community. He has the integrity, community commitment, and financial experience that we need. We are grateful to partner with Steven and his team for the benefit of the diverse borrowers who are currently left underserved by traditional banks.”
Jeff Lim, CEO of Island Pacific Supermarkets and Co-Chair of NAAC, stated “Mr. Sugarman and Mr. Seabold helped me grow Island Pacific into the second largest Filipino supermarket in the country through their lending, advise and support. I am thrilled to partner with them to expand access to capital to the next generation of minority owned businesses and entrepreneurs, and to attract capital and build operations in a sound, scalable way.”
In order to ensure that The Capital Corps appropriately meets the evolving needs of the diverse borrowers and communities it serves, it has launched a Community Advisory Board that will provide oversight and advice relating to portfolio lending programs, servicing strategies, and client acquisition and outreach.
The Capital Corps will serve non-traditional prime borrowers by returning to more traditional methods of underwriting residential real estate focusing on the 5-C’s of credit – including a borrower’s character. In its credit decisions, The Capital Corps will place special emphasis on the borrower’s character as opposed to narrow service-bureau-driven credit analytics deployed by banks during the recent credit crisis. The Capital Corps will partner with banks who wish to promote community development goals through lending to underserved communities including low income individuals and communities, borrowers with limited access to capital including African-Americans, Hispanics, underserved Asian populations, women-only borrowers, and borrowers with limited relevant credit histories.
About The Capital Corps, LLC
The Capital Corps, LLC empowers diverse small businesses, entrepreneurs and homeowners to pursue their dreams by expanding access to prime capital for non-traditional borrowers. The Capital Corps focuses on lending secured by residential real estate and provides credit counseling services to its borrowers. The Capital Corps has partnerships with the National Diversity Coalition and the National Asian American Coalition and community leaders to actively participate in the lending process through their Community Advisory Board to ensure its lending programs appropriately reflect the needs of the communities it serves. The Capital Corps’ team is led by its Founders Steven Sugarman and Faith Bautista and co-Founder Jeffrey Seabold. For more information: http://www.thecapitalcorps.com
About The National Diversity Coalition
The National Diversity Coalition is an official 501(c)(3) tax-exempt organization which is comprised of community organizers, faith-based leaders, nonprofit directors, and business owners working collectively for greater financial equality and empowerment for underserved groups. Together we work with corporate and government leaders to advocate for greater opportunities in homeownership, small business, and financial literacy for all people. For more information: http://www.nationaldiversitycoalition.org
– The Capital Corps closes strategic investment into Commerce Home Mortgage to further joint mission of expanding access to capital for diverse homeowners.
– The Capital Corps’ Founder Steven Sugarman and co-Founder Jeffrey Seabold join Board of Commerce Home Mortgage. Commerce Home Mortgage CEO Mario De Tomasi joins executive team of The Capital Corps.
NOVEMBER 7, 2017 (IRVINE, CA) Commerce Home Mortgage (“CHM”) announced today that it has closed a strategic investment from The Capital Corps, LLC (“The Capital Corps”) a California based financial institution led by former Banc of California Founder Steven Sugarman and National Diversity Coalition Chief Executive Officer Faith Bautista. As part of the transaction, the Capital Corps’ Founder Steven Sugarman and co-founder Jeffrey Seabold have joined the Board of CHM. Mario De Tomasi, Chief Executive Officer of CHM, stated “CHM has made significant investments in its infrastructure to enable it to scale its retail business over the next several years. Today is the perfect time to partner with Steve, Jeff, and their colleagues. This deal will enable CHM to grow its business more quickly and prudently and to better serve its borrowers. We are also thrilled to work with Faith Bautista and the National Diversity Coalition to ensure we finance the dreams of all of America’s diverse populations.” CHM, which was founded in 1993 and is headquartered in California, is licensed to lend in 26 states through its 25 retail offices and its wholesale channel. CHM CEO Mario De Tomasi will continue in his current role as well as assume an executive role at Capital Corps as part of the transaction. Mr. De Tomasi and CHM Founder Scott Simonich have also become strategic investors in The Capital Corps. “We are thrilled to work with the team at Commerce Home Mortgage. Their values, commitment and platform are enabling the CHM to be a compelling lender that works for its employees, borrowers and partners,” said Sugarman, “I look forward to helping expand the platform to include proprietary products and to help CHM better serve the needs of their borrowers.” Jeffrey Seabold continued “I have been impressed with Commerce Home Mortgage for quite some time and am excited to join their Board. I look forward to helping CHM ensure it is recognized as the home for the best brokers, originators, and partners in the industry.” The Capital Corps’ will offer proprietary lending products through Commerce Home Mortgage that focus on expanding homeownership for non-traditional prime borrowers currently unserved by banks and traditional lenders. These programs are expected to launch during the first quarter
LOS ANGELES--(BUSINESS WIRE)--Faith Bautista, President of the National Diversity Coalition (“NDC”) and National Asian American Coalition (“NAAC”), announced today a partnership with private investors and banking professionals, led by Steven Sugarman, to launch a lending platform to finance underserved homeowners and small businesses. This venture will seek to finance prime borrowers that are currently unserved by banks and other traditional financial institutions. It is estimated that this diverse population of borrowers currently accounts for over $100 billion in annual credit-worthy lending opportunities that is unable to access traditional sources of capital.
“It has been my dream to help enable these underserved and minority homeowners get the credit they deserve at rates they can afford. This will be the gold standard of community development. I am thrilled to have partnered with Steven Sugarman and his experienced team of executives,” said Faith Bautista.
Ms. Bautista, who recently received a Presidential appointment to serve on the U.S. Department of Treasury’s Community Development Advisory Board, will Chair the venture’s Community Advisory Board (the “CAB”) to represent the interests of underserved and minority borrowers and to ensure they receive equitable access to capital and credit counseling services. Vice-Chairs of the CAB will include Pastor Mark Whitlock, Gil Vasquez, NDC Chair Jin Sung, and NAAC Co-Chair Jeff Lim.
“For community development to be successful, it must be collaborative, profitable, and prudent,” Ms. Bautista continued.
Founding investors – led by Jeffrey Seabold, Mario De Tomasi, Scott Simonich, Marshall Geller and Lawrence Taylor – have committed to provide $20 million in equity to the venture, which will seek federal certification as a Community Development Financial Institution (“CDFI”) and membership with the Federal Home Loan Bank of San Francisco. This represents the largest ever equity capital raise to launch a new, non-bank CDFI since the founding of the program in 1994.
“These socially responsible investors are to be commended for their commitment to providing prudent financing to underserved, but credit-worthy borrowers. This lending partnership is innovative, important, and just beginning. As the state legislature recently stated, California has a shortage of two million affordable homes. The efforts of NDC and NAAC alongside their partners are poised to creatively reduce this lack of affordable homeownership,” said Bob Gnaizda, General Counsel of the NDC and NAAC.
“I am proud to be joined by a strong, passionate, and growing team of banking and lending professionals with the experience and track record to lead this venture and maximize its impact over time,” said Sugarman. “We are excited to continue working to empower the dreams of California’s diverse homeowners and small businesses by providing much needed access to prime capital to nontraditional borrowers. This is a huge, attractive market that has been overlooked and ignored for nearly a decade; it will no longer be.”
The venture will focus on meeting the credit needs of the unbanked and underbanked such as low income, minority -- including African-Americans, Hispanics, and Southeast Asians -- and women.
Following the 2009 recession, Congress passed the Dodd-Frank Act to reform the financial system including to establish the Consumer Financial Protection Bureau (the “CFPB”). In 2013, the CFPB implemented Regulation Z, Truth in Lending, which sought to prevent predatory lending and to ensure lenders had a reasonable expectation of repayment by each borrower at the time a mortgage loan was made.
The rate of homeownership has seen a material decline from its peak in 2008, as lenders have tightened lending underwriting standards to conform to Regulation Z, making more sound credit decisions and eliminating potentially predatory lending practices. While much of this decline in homeownership was an appropriate result of more prudent lending, the CFPB recognized that Regulation Z had the risk of reducing financing for credit-worthy borrowers in need of non-traditional underwriting methods. To do so they provided certain exemptions to organizations including CDFIs to enable thoughtful approaches to providing access to capital to these credit-worthy, underbanked borrowers. In fact, the rate of homeownership now stands several percent below its long-term average homeownership rates during the decade preceding the recent real estate bubble and great recession. This reflects a potential reduction in lending to homeowners of approximately $100 billion annually below the long-term averages.
According to The Urban Institute, the tightening of the mainstream mortgage market since the recession prevented 5.2 million mortgages between 2009 and 2014. As the market looks to responsibly expand access to credit, special considerations should be provided for groups that are underbanked to help bridge them into the standard banking system.
Community Development Financial Institutions have attempted to close the gap in lending to these underserved communities, but have not historically had the financial resources to meet the size of the challenge. For instance, California based non-bank CDFI’s made less than $2 billion in total home loans in 2016, most of which were loans made to be sold to third parties pursuant to U.S. Government and Agency programs (e.g., Fannie Mae, Freddie Mac, and FHA). This has left unaddressed the needs of a significant population of borrowers who do not fit within the narrow confines of these programs. The NDC and NAAC believes that many of these borrowers are prime credits requiring loans with low loan-to-values (the loan-to-value measures the amount of the loan in comparison to the value of the house being financed). As co-Founder Seabold noted: “There exists significant unmet demand in California and nationally from underbanked, minority and women borrowers for low LTV, prime mortgage loans. This need can be met in a sound and prudent manner.”
The NDC and NAAC will continue to seek partnerships with social impact investors, banks, and other corporations to help address this critical need and to better serve the over 25% of the population that the FDIC has deemed unbanked or underbanked.