Silverado Adopts New Biz Model

Silverado Financial Inc., Campbell, Calif., has announced the adoption of a new business model focused on the acquisition of established, profitable mortgage brokerage and banking operations in Northern California.The company said the move was linked to the transfer of real estate licenses from Realty Capital Corp. in conjunction with a binding letter of intent signed on April 9. The acquisition model calls for buying the companies for a low multiple of free cash flow, with the seller carrying a note that will typically be paid over a 12-month period from the acquisition's own cash flow, Silverado said. The company said prospective changes in the Real Estate Settlement Procedures Act "will force the relationship between the mortgage broker and the mortgage banker to change," making it "more important than ever" that the brokerage community have "immediate access to pertinent information from its lending sources." Silverado's principal business consists of investing in, originating, and servicing mortgage loans, primarily those secured by first trust deeds to residential and commercial properties.