Fundraising - DECEMBER 31, 2014

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Firm raises $1.3b for residential mortgage fund

by Larry Gray

Lone Star Funds has closed its Lone Star Residential Mortgage Fund I, raising $1.3 billion of equity from 11 investors, according to an SEC filing. The fund will invest in U.S. single-family residential mortgage loans.

Caliber Home Loans, a Lone Star affiliate, will originate the loans. According to an October Bloomberg article, the loan program will focus on borrowers with troubled credit histories and first-time homebuyers with high student debt, and include Alt-A borrowers, those who are self-employed or have limited documentation.

As part of the fund strategy, the loans will be packaged, securitized and sold, with LSRMF retaining the riskiest tranches. The fund is targeting gross returns of 15 percent after a three-year holding period.

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