STANDARDIZE IT

Weekly Insights from Sol Berkoff
Principal at Charleston Capital, Inc.

On Monday, the editors at Bloomberg wrote an article decrying the state of the US residential mortgage market. 

They were right to do so -- access to home mortgage credit is far more limited today than it was pre-crisis.  While the markets for commercial mortgages, leveraged loans, and corporate bonds have seen blistering interest, it has been years since the average American could easily get a mortgage.

And that is a real shame.  Below find the Urban Institute’s Housing Availability Index for the GSE Channel.  As you can see, although lending standards are loosening, they are still dramatically tighter than twenty years ago. 

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Source: Urban Institute

A major weakness of the residential mortgage system is the lack of standardized data.  Once a problem occurs, it is far more difficult to solve than it should be.  As a result, originators end up being overly cautious on credit.

We at CCI are careful students of the residential mortgage market.  We saw the power of data during the housing crisis and housing recovery, and are excited to apply those lessons to small business finance.

We are building our Secure Funding Ecosystem to efficiently finance small businesses.  Our founding principles are standardized data, standardized servicing practices, and control of the cash.

Sometimes systems are better built de novo.  As we build ours at CCI, our focus is to standardize it.