BMC, RED Capital Cross-Trafficking Deals

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DALLAS-In an exclusive agreement, BMC Capital LP and RED Capital Group will be cross-trafficking loans for the $400,000 to $5-million category. The duo has rolled out the plan after nearly two years of discussions.

“It effectively gives us almost unlimited capacity to do our small-balance loans,” Jonathan Morris, president of Dallas-based BMC Capital, tells GlobeSt.com. “We have the funded-up volume to do over $5 billion per year.” BMC’s team has originated more than $2 billion in 3,000 transactions during its 15-year history.

Morris says the exclusive agreement and BMC’s plan to add a half dozen more offices to a 15-office network will translate into 120 hires this year. In the past three years, the company has tripled in size, recently adding a Sacramento office and making plans for one in Brighton, MI near Detroit.

Under the agreement, Morris says Columbus-based RED Capital, part of National City Corp., has agreed to channel all small-balance loan applications to BMC to originate, underwrite and close. BMC will sell or securitize the loans through RED’s broker-dealer arm, RED Capital Markets Inc. Morris says there are exclusions, like Fannie Mae DUS deals, but basically the alliance is a reciprocal agreement for the small-balance loan industry.

BMC had been approached by “other brand-name investment banks,” Morris says, “but we felt like if we were going to make a long-term commitment that these were the people we trusted and felt comfortable with.” The loans will be marketed as BMC Direct.

The alliance gives BMC an inroad into the Northeast. From RED Capital’s perspective, the deal shores up National City’s plan to beef up its Southwest presence while adding a ready-to-go company in a rapidly growing industry segment to its platform. RED has 12 offices, including Fort Worth, with 225 employees nationwide.