The Ranieri Mortgage Plan
Lewie Ranieri is a famed mortgage dealer. He learned his reputation at Salomon Brothers in the 1980’s. His staff of mortgage traders was depicted in Michael Lewis’s Liar’s Poker. Ranieri developed the concept of mortgage-backed securities that helped open the mortgage market to billions of dollars of newfound investors.
When the housing industry began to tumble, these mortgage-backed securities were vulnerable. Many people blame Ranieri’s plan for the near collapse of many financial institutions and hundreds of billions of dollars lost by investors.
Since leaving Salomon Brothers, Ranieri has stayed active in the mortgage industry. Unlike investors in his products, he has amassed quite a fortune. Now, Ranieri has a plan that he hopes will serve as a model to save the homeowner.
His prototype is called the Selene Residential Mortgage Opportunity Fund. The program’s mission is clearly stated. The fund buys mortgages at a deep discount, works with homeowners to get them back paying a revised obligation and then resells the new mortgage at a profit.
To encourage homeowners to get back on track, the Ranieri fund passes along a greatly reduced mortgage obligation. The key component is Selene’s willingness to cut the loan balance. Ranieri points out that this opportunity serves a higher purpose than government plans to lower payments by lowering interest rates. The Selene Fund gives the homeowner unexpected equity at realistic values.
Thus far, Ranieri has raised $825 nm=million form foundations and corporations like the South Carolina Retirement Systems. Ranieri hopes that the government will develop similar programs. Ranieri realizes that his small fund will not solve the U.S. housing crisis. He hopes that it will serve as a prototype for future programs.
Ranieri’s hand-on approach is refreshing and has given frustrated owners a ray of hope in an otherwise dismal environment.