Former Fremont CEO Opens Shop, Purchases REO
LAKE FOREST, CA-Kyle Walker, a former top executive at Fremont Investment & Loan - a once-high-flying subprime lender - has a new company that is actively buying distressed homes, some for as little as $1,000.
Based here, the upstart bought roughly 260 properties by the time 2009 ended. It is trying to raise fresh capital with the hope of increasing its portfolio. "We have a pitch book out with Cohen Financial and hope to raise between $6 million and $7 million," said Mr. Walker.
The company he owns and manages is called Home America. His management team includes Bob Clafford, a former executive vice president in charge of wholesale lending at FI&L, and Alan Burke, a former analyst for PacifiCare Health Systems. Messrs. Clafford and Burke serve as EVP and chief accountant of Home America, respectively.
According to Mr. Walker, Home America acquires properties through the auction process, aiming to resell them after making the necessary repairs. But instead of having buyers of its homes obtain their own mortgage, Home America holds the note in portfolio after accepting a small downpayment.
"We do 'land contracts,'" Mr. Walker explained. "In some cases we might take $750 down and they pay us $400 a month." To date, Home America has paid between $1,000 and $10,000 for its properties. It holds the paper in portfolio and uses a subservicer called Evergreen Note Servicing in Washington to process the monthly payments.
"A lot of the purchasers are first-time homebuyers who are renters that live within five miles of the house," he said.
The investor has bought homes or lots in 22 states but most of its activity has been in the Midwest.
Mr. Walker left Fremont Investment & Loan in the summer of 2007 as it was winding down its operations. He held the title of president and CEO. FI&L once serviced $28 billion in A- to D mortgages. Its parent company, Fremont General Corp., filed for bankruptcy protection in 2008 but continues to trade on the OTC pink sheets market.
His 25 years of experience span the complete mortgage origination function from retail and wholesale originations through quality control and capital markets to the servicing side of the business, including marketing training and legal functions.