Velocity Financial, Inc. Announces Nonperforming Loan Sale and New Servicing Partnership
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upbfinancial
Unpaid principal balance (UPB) is the remaining portion of a loan’s original amount that the borrower still owes, similar to the current balance showing how much is left on a mortgage. Investors care about UPB because it helps size future cash flows, assess the amount of collateral still backing a loan, and gauge credit and prepayment risk—much like knowing how much of a house loan remains to judge future payments and potential losses.
non-performing loansfinancial
Loans on a bank’s books where the borrower has stopped making scheduled payments for a prolonged period (commonly about 90 days), so the lender no longer expects full repayment on time. Think of them as overdue IOUs that may never be paid back; a rising level of such loans weakens a lender’s earnings and balance sheet, signals greater credit risk in the economy, and can hurt investors through lower dividends, loan losses, or declines in the lender’s stock value.
third party servicingfinancial
Third party servicing is when a lender or investor hires an outside company to handle ongoing tasks for a financial product—like collecting payments, managing accounts, handling customer calls, and dealing with missed payments. It matters to investors because the servicer’s efficiency and compliance affect cash flow, borrower behavior and legal risk—similar to hiring a property manager to run a building: good management preserves value and poor management can create losses or regulatory trouble.
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--
Velocity Financial, Inc. (NYSE:VEL) (“Velocity” or “Company”), a leader in investor real estate loans, announces an agreement to sell $133.2 million in UPB of non-performing loans at a significant premium to the current mark on our balance sheet.
In connection with this transaction, the company is entering its first-ever “Third Party Servicing” mandate to manage those same loans for the buyer, creating a durable, capital-light, fee-based revenue stream.
“This opportunistic transaction reflects our continued efforts to optimize our earning asset base to benefit stakeholders across our capital structure,” said Jeff Taylor, EVP of Capital Markets. “Our new servicing partnership enables us to maximize profitability and releases capital to drive continued portfolio growth and enhanced return on equity. This transaction further reflects the market’s appreciation for our outstanding origination and asset management capabilities and the inherent value of the assets we create across our platform.”
The transaction is expected to close prior to year-end.
About Velocity Financial, Inc.
Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages business purpose loans secured by 1-4 unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers built and refined over 21 years. For additional information, please visit the Company’s investor relations website at www.velfinance.com.
