Velocity Financial generated $2.60 million of net income in the first quarter of 2020, with volatility from the coronavirus causing problems for the nonbank in March and beyond. Net income declined by 50.2% from the previous quarter.
Velocity focuses on originations of non-agency mortgages for investment properties, both residential and small-balance commercial. The firm was on track for record production in the first quarter, but ended up with $248 million in originations, down 22.4% sequentially.
The lender suspended originations near the end of March and on May 1, many of Velocity’s loan production staff were furloughed for 60 days. Company President and CEO Chris Farrar said roughly 50% of the company’s employees were furloughed. The firm had 262 full-timers at the end of 2019.
Farrar stressed that despite the turmoil in the financial markets in recent months, Velocity didn’t engage in distressed loan sales or have significant impairments in its loan portfolio. “While it is still too early to accurately predict the ultimate impact of this health crisis on the economy and Velocity’s short term operations, we are positioning the business to thrive in the long term,” he said.
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