DRI recently appeared in Opalesque. The feature is below.
Bailey McCann, Opalesque New York:
Florida-based hedge fund DRI has launched a non-performing loans fund, with the goal of actually helping the communities it invests in. DRI recently brought in more than $9 million in unpaid principal balance of non-performing loans to assist residents in low and moderate income communities with housing preservation and a path to homeownership.
As an impact investment manager, DRI is also certified by the U.S. Department of Treasury as a Community Development Financial Institution. CDFIs are mission-driven financial institutions dedicated to providing financial services that meet the needs of underserved communities. In order to get this certification, DRI secured the $9.3 million UPB in single-family, non-performing loans and a loan-to-value ratio of 74%. DRI then works with homeowners and local communities to start a repayment plan.
“People don’t realize that each foreclosure in their neighborhood costs 1-2% in home value,” explains DRI Managing Director and Chief Operating Officer Steven Kirsch in an interview with Opalesque. “That impacts adjacent property values. Our social impact objectives are to prevent foreclosure, stabilize distressed neighborhoods, create jobs and provide affordable financing to communities underserved by mainstream banking.”
One in six Americans live in economically distressed communities in the US. In addition to offering these loans as an investment vehicle through the DRI Mortgage Opportunity Fund, the firm acts as a provider of alternative financing to distressed homeowners. DRI will work with homeowners to restructure their mortgages in order to bring them back into repayment. “We realized that many folks from low and moderate income communities just don’t fit into the standard underwriting box needed to obtain a mortgage,” Kirsch says.
As part of their services, they provide borrowers with intensive financial education counseling, debt management planning, business plan development and strategies for reducing monthly homeownership costs.
DRI already invests heavily in Michigan and plans to invest throughout the United States. The firm has a somewhat customized restructuring model in order to work within the regulations of each jurisdiction. DRI is also building up a steady referral network of non-profits and social workers who work with distressed homeowners.
“We think that investing with communities in mind allows us to see the world in aways other investors do not,” Kirsch adds. “We can still provide investors with a strong risk-adjusted return and have an impact.”