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MCAP’s Fusion is Here

It’s a good day to be a top status broker at MCAP. This morning the company launched its Fusion line of credit (LOC) to its biggest supporters—i.e., “Ambassador Plus” brokers.

“Our brokers asked for this product and we delivered,” MCAP’s VP Sales, Elaine Taylor says. Fusion is the only automatically readvanceable mortgage available to brokers from a national non-bank lender.

Several other monoline lenders have talked about offering this sort of product, but none of them have been able to arrange the funding for one. Most non-bank broker lenders rely on securitization and the LOC component can’t be securitized. Hence, you need a balance sheet lender (e.g., bank) to fund it, and that’s way easier said than done.

It also requires a significant IT infrastructure for servicing, due to the readvanceability piece. That build-out and testing partly explains why it took so long to launch this product (we reported on Fusion back in November). This means that MCAP has built somewhat of a moat around the product among non-bank lenders.

Some brokers will ultimately be disappointed, however, since only top-tier partners (those doing $25 million+ or 100+ deals with MCAP each year) will have access to Fusion. The goal is to “differentiate our status program and reward our top supporters,” says Megan McDonald, Vice President, Sales. The company says it has no current plans to broaden availability of the product to lower-tier brokers, and definitely not this year.

Here’s a quick rundown on features:

  • Rate at launch: Prime + 0.50% (which is standard among most mainstream lenders)
  • Available segments: Two (one LOC + one fixed or variable mortgage portion)
  • Debt ratios: Up to 35/44 with a 680+ credit score
  • Maximum global limit: $750,000 (combined mortgage and LOC)
  • Maximum amortization: 25 years
  • Interest-only payments: Yes (on LOC portion)
  • Penalties: None on LOC portion; standard penalties plus reinvestment fee on mortgage portions
  • Property type: Owner-occupied only (up to 4 units)
  • Maximum LTV: 65% for the revolving LOC portion; 80% overall
  • Other: The product is portable. No gifted down payments are allowed. Funds are accessible via online transfer to the client’s bank account.

Apart from making the Fusion more widely available, the only other thing we’d love to see in this product is one more sub-account on the LOC. That would let clients separate personal and tax-deductible investment/business borrowing.

Compared to other lenders’ readvanceable products, MCAP’s Fusion has a $1 minimum on the LOC, compensates brokers upfront and after 60 days on the LOC portion, and offers higher debt-ratio maximums than most. This flexibility and MCAP’s large installed base of status brokers pretty much guarantee this product will be a hit.