The American Home Opportunity Mortgage Fund (“AHOMe”) is a Fund designed for the needs of investors seeking attractive yields from a portfolio of residential mortgage loans made to a deserving, yet underbanked community of borrowers.
The Fund buys and holds Individual Taxpayer Identification Number “ITIN” residential mortgages made to individual residential mortgage borrowers. The managers of the Fund work with lending institutions such as banks and credit unions to encourage the origination of these non-agency loans to borrowers across the United States. ITIN mortgage loans are very similar in nature to conventional agency mortgage loans. They are generally 30-year term, fixed rate, borrowers generally have credit scores, and the mortgages have standard loan covenants. They differ in that borrowers typically put down more equity at origination and pay a slightly higher interest rate on the loan. The Fund’s investment objectives are to provide investors with current income from a pool of residential mortgage loans and maintain a well-diversified portfolio of said loans to qualified borrowers. AHOMe offers investors the benefit of owning residential ITIN loans in an attractive vehicle that offers economies of scale and quarterly liquidity.
- AHOMe provides the assignment of individual loans in its portfolio to investors for credit, demonstrating investment in low-income and/or minority communities.
- The average AHOMe borrower has a FICO score of 719.
- AHOMe has a 50% risk weighting for banks and can only hold bank and credit union eligible assets.
- AHOMe’s portfolio averages an 80% LTV at origination and has a current LTV of 73%.
- The seasoning of the loans in the Fund’s portfolio averages 21 months.
- 35% of AHOMe’s loans are to LMI borrowers and 25% are in LMI census tracks.
- The average loan balance in the AHOMe Fund is $190,000.
- The Fund has gross loan yield of 6.97% and seeks a net yield of 4.00% annually which is earned by investors as monthly interest income.
- There have been no loan defaults on any AHOMe loans, and no loans are past due. 34% of AHOMe’s loans are paid ahead one month by borrowers. ITIN mortgages tend to have better credit performance than agency loans for a variety of reasons.
The AHOMe Fund seeks to provide a high level of income by purchasing and holding a pool of residential ITIN loans. The Fund invests at least 90% of its assets in ITIN loans and may also hold cash or other agency or non-agency first lien mortgage loans or mortgage bonds. Investors are seeking yield in an ultra-low interest rate environment. ITIN residential first-lien mortgage loans are high yielding, with credit performance that generally exceeds conventional mortgage loans with similar income and credit score characteristics. ITIN loans are not as easy to find and originate as conventional mortgages; AHOMe has worked to cultivate significant origination capacity in these loans. The AHOMe Fund structure helps investors access ITIN loans efficiently, provides for better credit and geographic diversification and has economies of scale. The Fund can help investors meet low-income, underbanked, minority borrower goals and meets several criteria of an ESG investment.
Equalize Capital & Alden Investment Group
Equalize Capital is an investment adviser registered under the Investment Advisers Act of 1940. Equalize Capital serves as the investment advisor to the Equalize Community Development Fund (ticker EQCDX) and the American Home Opportunity Mortgage Fund (AHOMe). Equalize Capital is headquartered in San Juan, Puerto Rico, with a satellite office in the suburbs of Philadelphia, Pennsylvania. Equalize has extensive ties to the banking industry through its asset management activities.
Equalize is affiliated with Alden Investment Group, which consists of several registered investment advisor entities and a broker/dealer. Alden provides additional ties to the banking industry through a sales force of 20 individuals who focus on providing products and services to banking companies. Founded in 1995, Alden Investment Group is an independently owned financial services firm comprised of a broker-dealer, Alden Securities, and registered investment advisor, Alden Capital Management. Alden offers a diverse menu of services including individual asset management, investment banking, retirement plans, private placements, trading services and other RIA/BD offerings.
Alden and Equalize have over 100 advisors, registered representatives and employees in over 20 states.