What We Do
As the nation struggles with the worst foreclosure crisis since the 1930's, Kalomar, and companies like it, have emerged as the best hope for the roughly seven million US households behind on their mortgage payments. Nimble, flush and willing to strike deals with borrowers, Kalomar has a significant edge over banks and other lenders than can be mired in bureaucracy and hampered by government rules about which loans can be renegotiated and how.
By c
ontrast, Kalomar is the sole owner of its portfolio loans and has a servicing division that can negotiate directly with the borrowers. The result? Every case is individual and borrowers love it.
But the main reason Kalomar can strike such deals is that we buy our loans from banks at steep discounts to the balance due. This gives us a significant advantage over the previous note-holder and offers the potential for substantial profit.
For example, we can buy a loan with a $100,000 unpaid principal balance for $50,000 and then settle the loan for $70,000 and still realize a substantial profit. While settling the loan at a discount doesn't work in every case, its not the only option either. In fact, for every loan purchased, we have a choice of six exit strategies:
- Take title to the property via foreclosure (to sell or rent and hold).
- Cooperate with the borrower to resell the home as-is and get paid off at full face value.
- Keep the note.
- Modifying the note to re-perform so that it can be sold to another buyer at a higher price.
- Offering the borrower a short payoff.
- Help the borrower to refinance and then receive a lump sum payout.
In addition to buying loans for its own portfolio, Kalomar also provides a suite a distressed debt services to institutional investors looking to get in on the action. For loans sold to investors, Kalomar's services include the execution of the above six exit strategies.
Over the past two years, less than $25 billion of delinquent mortgages have been sold to investors who specialize in this area. That is only about 0.25% of U.S. home loans outstanding. This translates into a significant opportunity for investors in the years ahead.
Kalomar buys loans to make a profit on them, and it is often more profitable to keep the borrower in the home than to foreclose. If a delinquent loan can be turned into a "performing" loan, with the borrower making regular payments, the value of that loan rises, and Kalomar, or its clients, can turn around and either refinance it or sell it at a profit.
To learn more, please contact us.
Blog
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