Fenway Summer, the advisory and venture firm launched last year by former Consumer Financial Protection Bureau (CFPB) Deputy Director Raj Date, is gearing up to move into the ‘non-qualified-mortgage (non-QM)’ market in a big way, now that it has reportedly acquired start-up Ethos Lending.
As per a New York Times report, Fenway Summer's acquisition of Ethos Lending gives it the needed infrastructure to quickly launch a new wholesale home loan business. As a result of the merger, Fenway Summer has changed its name to Ethos Lending.
‘We had been looking for the right platform to acquire that would essentially allow us to get into the market faster and at a better scale,’ Date told the New York Times. ‘If we could wave a magic wand and accelerate our own entry by six months, nine months, a year, what would it look like? It would look like this.’
Date said Ethos Lending would be issuing non-QM loans on a wholesale basis – however, the firm does not plan to move into subprime lending. He told the newspaper that Ethos Lending plans to hold all the non-QM loans it issues in portfolio. However, the article doesn't mention whether the firm plans to service the loans or whether it will farm that function out to a subservicer.
When Date and three colleagues from the CFPB launched Fenway Summer last year, some regulators, politicians and watchdog groups expressed concern that the firm might have an unfair business advantage, in that its founders are all CFPB "insiders."
Initially, Fenway Summer announced that its focus was to serve ‘those who do not meet the standards for qualified mortgages as set by the CFPB.’
Shortly after the firm's launch, however, some House Republicans requested an inquisition to determine if Date and his colleagues were devising a plan to profit from their inside knowledge of the CFPB's rules.
It would appear that, for now, there has been no determination that the former officials' actions represent any form of misconduct.
Date will be chairman of the combined firm, while Mark Lefanowicz, who has been running Fenway Summer's mortgage venture, will serve as CEO, according to the New York Times report. The founder of Ethos Lending, Adam Carmel, will serve as president.
Although Ethos Lending plans to primarily focus on non-QM loans, which it will start offering by the end of this year, it also plans to offer some QM loans, which will be available by the end of June, according to the report.