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Financing for Mortgage Servicing Rights

There is no substitute for experience and MorVest's principals have experience with MSR financing going back to the early 1990's. MorVest is proud to serve as exclusive advisor to Customers Bank (NYSE: CUBI) on MSR financing. Options range from revolving sublimits of warehouse lines to term debt of up to 6 years for qualifying companies on FNMA and FHLMC MSR. Advances typically are at 60% of estimated fair value and other terms such as the debt repayment schedule can be customized for each borrower. We have developed proprietary models to project results from operations and future balance sheets for firms retaining MSRs; these resources are available to borrowers in the Customers Bank MSR finance program at no extra charge (within reason).

Our MSR finance program has been well received in the marketplace. Since inception in early 2014, MSR facilities have been closed and funded for many companies, most of which have been subsequently increased and/or extended. We currently have a significant pipeline of deals in process. Our understanding of the MSR financing process including Agency acknowledgment agreements is unsurpassed and our legal documents are well refined. For more information, contact David Fleig at dfleig@MorVestCap.com or John Sullivan at jsullivan@MorVestCap.com.

MSR Brokerage

Morvest has become a major player in the MSR brokerage space. The foundation of our ability to execute well for clients is our outstanding MSR analytics capability. John Sullivan runs our analytics division, utilizing state of the art tools and brings over 25 years of MSR asset valuation and management experience to our clients. We pride ourselves in attention to detail, assisting clients every step of the way from sale portfolio selection to Agency approvals and closing. We know the buyers well and understand what they are looking for and how they execute. We conduct auctions or private placements depending on the unique circumstances of each client, with the goal of achieving best execution both in terms of pricing and the compatibility of the parties. For more information, contact David Fleig at dfleig@MorVestCap.com.

Mezzanine Capital Placements

Many of the largest independent mortgage companies have aggressively retained MSR in recent years. While MSR financing arrangements may represent the cheapest way to address liquidity, other avenues of adding cash may be necessary. For one thing, the advance rate on MSR facilities is not likely to exceed 60% of fair value and in many cases may only be 50%.

Even the largest independent mortgage firms may need to add to their capital stack to convince their existing MSR lender to add capacity to their line, particularly if the MSR asset is approaching or exceeds total net worth. In some cases, additional capital will be required for expansion of origination channels, including acquisitions. We believe the best alternative for such companies will be adding mezzanine capital, either subordinated debt or preferred stock. While more expensive than MSR debt, mezzanine capital is still far cheaper than equity and thus should be accretive.

MorVest is interested in reviewing select opportunities to place mezzanine capital for high quality companies. Our criterion for eligible mortgage companies includes:

-Company must have one or more GSE licenses to originate and service residential mortgage loans; net worth prior to this transaction must be not less than $10 million with most investees expected to be much larger.

- Track record and reputation must be excellent over many years in the eyes of key counterparties such as mortgage warehouse lenders, investors and outside accountants

- Must be clean with all applicable GSEs and state regulators, with no material unresolved audit issues

- Trailing risk with regards to loan repurchases and indemnifications must be quantifiable and low risk overall

- Strategic plan must be well defined, make sense in light of industry conditions, and the management team must have the core competencies to have a good chance of successfully implementing it

- Retaining mortgage servicing rights must represent a key element of the business plan

Terms will vary based on our assessment of each company's unique circumstances including the existing balance sheet and earnings history. For more information, contact David Fleig at dfleig@MorVestCap.com.