Knowing the Business:
Whitebriar’s Harry Van Sciver learns by experience
The Resort Trades – 2003 (Reprinted with permission of the Publisher)
With over 30 years of experience in both the hospitality and finance industries, Harry Van Sciver has seen his share of hard work. From working as a bellhop in his father’s hotel, to pleading cases for RTC, to finally owning and operating his own finance company, Van Sciver and his wife Maggie bring a unique set of experiences and expertise to the industry.
Learning Early
Harry Van Sciver was born and raised in Beverly, New Jersey, only blocks from the Delaware River, on Van Sciver Street. “My family has lived in the Burlington County area for over 250 years,” explains Van Sciver. “I grew up fishing, swimming, and canoeing in the same waters and hunting in the same woods that my family has lived for generations.”
Van Sciver was introduced to the vacation industry at a very young age, when he and his family lived each summer at the Dunes Hotel, their family-owned and operated summer business in Ship Bottom, New Jersey on Long Beach Island. “The Dunes was a weathered but elegant little hotel on the Ocean, the type of operation you might find today on the Maine Seacoast, but long gone from the Jersey Shore,” explains Van Sciver. “We had a big common room with a cheery fireplace, cypress-paneled guest rooms, a private beach & even an informal lending library, but few modern amenities. Only about 20% of the rooms had private baths, there was no heat, poor lighting, and we regularly ran out of hot water. My dad did most of the plumbing, painting and carpentry, with sporadic help from me. My mom ran the business, from reservations & front desk to marketing, bookkeeping & customer service. My younger brother George and I were bellhops, errand boys, even janitors. Our whole family lived behind the kitchen; we used an outdoor privy. I spent my free time on the beach, fishing, or in the pinball arcades – what great summers!”
In 1972, Harry’s father was promoted to President of the Beverly Bank, and his mother became Manager of the Beverly Building & Loan as well, so the family sold the Dunes Hotel. Harry and his brothers exchanged their bellhop caps for banker’s hats, helping their parents make their rounds around town, and performing odd jobs for their father’s additional businesses, which included a local billboard company and a small farm. “One day we might be sorting checks, the next day painting billboards, and the next day cutting firewood” says Van Sciver.
After grade school, Van Sciver attended Doane Academy, where he was active in school sports programs, lettering in Wrestling, Basketball, Baseball, and Soccer. He was also the winner of numerous academic and civic awards. Upon graduation he won the Head Boy Cup, the highest honor awarded to a senior boy.
Even with all of these school activities, Van Sciver continued to assist his father in his businesses. “I had the misfortune of doing all the landscaping and mowing at the Beverly Bank branches for a very low wage set by dad,” explains Van Sciver. “And we also spent lots of time in the computer center, troubleshooting card sorters printers, et cetera – this was back in the earliest days of bank data processing. But we had fun, too – Once Dad and I performed an impromptu currency exchange for a bank customer, transporting $240,000 in Central West African currency in a briefcase to a correspondent bank in Manhattan, both carrying loaded side arms.” Van Sciver also continued to work with his family on their farm. The farm business was called Whitebriar.
Van Sciver also developed a passion for writing during high school. His poems and short stories were published in local journals, newspapers and literary magazines; and he wrote press releases and advertising copy for his father’s bank. He also wrote a plethora of song lyrics, many of which were incorporated into performances by amateur rock and blues bands, in which Harry played drums. “I loved music and literature,” says Van Sciver. “I had aspirations of becoming a rock poet, like a latter-day Alan Ginsberg.”
A Career in Rock & Roll?
Van Sciver left Burlington County in 1977 to attend the University of Pennsylvania in Philadelphia, where he majored in English. While at Penn, Van Sciver became a brother of the Delta Upsilon fraternity, honing his leadership skills by holding various offices within the organization.
At Penn, Van Sciver began to mold his amateur music career into a more solid plan, continuing to write and record music with a number of bands, and making plans to pursue a career as a professional musician after graduation.
“I was the operating partner in the most prolific of my bands (called The LIMIT), negotiating most of our contracts, performance fees, auditions & etc,” explains Van Sciver. “Although The LIMIT never made it commercially, I remain friends with all of the band members to this day. One is a lawyer, one is a scientist, one is a professor, one is a CPA, and one runs an economic redevelopment authority – so much for careers in Rock N’ Roll! Ironically, while at the University of Pennsylvania, I took courses at The Wharton School in Economics, Business Law and Marketing, believing such knowledge would prove practical later on in my music career. As it turned out, these courses proved useful in the finance business instead.”
The Business of Finance
In 1981, Van Sciver graduated from the University of Pennsylvania and followed his music career aspirations in the Philadelphia area. Stints as a construction worker and machine operator paid the bills while he pursued a future in music for the next year. But then in 1982 Van Sciver decided to shelve the music career in favor of a trio of jobs.
His full-time job was as a collection agent for Allied Bond, an agency collecting delinquent consumer accounts. “Working at Allied was like ‘boot camp’ for consumer credit. We pounded the phones day and night collecting delinquent accounts for mail order catalog companies, airlines, Visa/MasterCard issuing banks, and rental car companies. We even bought and collected NSF checks,” explains Van Sciver. “Allied Bond was not for the faint-hearted – the pay was mostly commissions, so if you could not collect you did not last more than a few weeks.”
In his spare time, Van Sciver worked writing and designing newsletters for Philadelphia area businesses. “My newsletter business was interesting because I had to learn enough about each client’s business to write about,” says Van Sciver. “It paid poorly, but I enjoyed it nonetheless, because it helped me develop listening skills that have helped me later in business.”
Van Sciver also found himself working part-time for his mother at the Beverly Building & Loan in New Jersey. “The Building & Loan was a great basic education in lending, including the ‘four C’s’: Collateral, Capacity, Cash Flow & Character,” says Van Sciver. “Interestingly, the venerable Board at this institution often approved or denied loan applications principally on matters of Character. A prospective Borrower’s marginal Cash flow or sub-standard Collateral might be overlooked, but never a weakness in his Character. One old gent once told me, ‘Figures don’t lie, but liars figure.'”
While Van Sciver’s simultaneous careers may seem unrelated, the skills that he learned and developed while balancing these three jobs helped him to become successful in the financial industry. Having been promoted at both Allied Bond and the Beverly Building and Loan, trying to apportion responsibilities and appropriate time led Van Sciver to look for a new position that might combine the fields at which he had become so adept – collections, receivables financing, writing/documentation and lending.
Financing the Resort Industry
In 1985, Shawnee Development, a timeshare developer in the Delaware Water Gap Recreation Area, offered Van Sciver a position managing collections. Although he was unfamiliar with the concept of timesharing, the idea of managing over $100 million in loans was a promising proposition.
“Within months of starting at Shawnee, I was managing not only collections, but also the servicing of a significant loan portfolio,” explains Van Sciver. “This included mostly Shawnee timeshares, but we also financed fractionals, back-end “vacation” packages, and home site mortgages. We had all types of accrual, billing and payment plans. We serviced some loans directly, some indirectly, and we also serviced 3rd party loans on our system for client banks.”
Soon after, Van Sciver was entrusted with an additional responsibility – managing Shawnee’s timeshare lender relationships. “We had hypothecated or sold over $120,000,000 in timeshare notes to about a dozen different lenders,” explains Van Sciver. “Each transaction was different, with its own covenants, terms and conditions. This would have been confusing to me, except for two people: Bob Shebelsky and Maggie Greenfield.
“Bob Shebelsky was the President of Shawnee when I worked there [now semi-retired], and a great teacher. A brilliant CPA, Bob understood the receivables loan documents and transactions better than the Lenders and lawyers who originated them – he could explain in ten minutes what might take days for a team of accountants to unravel.
“Maggie Greenfield was the smartest woman I had ever met, a beautiful and sophisticated New York investment banker who had also graduated from the University of Pennsylvania and earned a Finance Degree from The Wharton School. Maggie worked on Wall Street at Morgan Stanley & Company and Bankers Trust Company. When I realized that she actually wanted to settle down and have children, I seized my opportunity and married her right away in September of 1987. Whatever I hadn’t learned already about lending and credit – Maggie taught me. When she is not caring for our family, Maggie works with me in Whitebriar Financial and is still the smartest woman I know.
“Shawnee was a proving ground for a lot of talented employees who later made their mark throughout the timeshare industry; many of them remain my friends to this day, several are or have been business partners. Shawnee was a busy company during the mid-eighties, we originated approximately $20,000,000 per year in timeshare and vacation sales, plus millions more annually in general real estate. Shawnee also owned and operated a large Inn, plus Shawnee Mountain, the #2 ski facility in Pennsylvania at that time, and several other resorts and hotels around the country. Everyone at Shawnee was glad to share their knowledge – there were no fiefdoms, just enthusiastic people who all thought ‘out of the box.'”
By the time Van Sciver had left Shawnee, he was entrusted with oversight of collections, servicing, credit underwriting, real estate escrow, timeshare title/trust, maintenance fee billing & collections, and managing the company’s receivables lending relationships.
Expanding Horizons
As credit tightened and the economy slowed in the late 1980s, it was time for the Van Scivers expand their horizons. Maggie left Wall Street to work out troubled commercial real estate loans for National Westminster Bank, PLC, and Harry accepted a job with the RTC Metropolitan Consolidated Office in Somerset, NJ as an Asset Specialist.
Nationwide, the RTC held almost $1 billion in distressed timeshare assets, including end loan portfolios, hypothecation loans, acquisition and development loans, mortgages on multiple projects, unsecured lines of credit to timeshare developers, a vacation club, property management companies, and even several servicing companies. “The RTC had few personnel with any knowledge of timesharing,” explains Van Sciver. “I felt this was a great opportunity for someone like me with a background in the timeshare industry. Of course, the RTC credit procedures were all new to me, so was going before the Regional and National RTC credit committees to present ‘cases’ pertaining to workout or liquidation. I had several early cases rejected by Committees. Once I learned the RTC credit documentation process and discovered how to play to the politics of key Committee members, then things went more smoothly.”
With each new workout, portfolio or bankruptcy, Van Sciver was underwriting different resorts around the country. He was discovering firsthand how to (and how not to) finance timesharing.
“The work at the RTC was challenging,” says Van Sciver. “Sometimes we had to step in and manage projects, organize homeowners associations, create inventory trusts, even engage in sales to keep a project solvent and protect our existing collateral. At times I was negotiating with a developer, several of his lenders, a potential acquirer of the developer’s assets, and maybe even the FBI if there had been a criminal referral – all simultaneously. Such negotiations were often heated, with millions of dollars of taxpayer money at stake, and the complex RTC procedures made my job even more difficult. However, at the RTC we could hire the best lawyers, top outside firms with expertise in bankruptcy, real estate conveyancing, condominium law, the Uniform Commercial Code, and litigation – this was a great advantage. I learned ‘on the job’ from a number of brilliant attorneys.
Going out on a Limb
By 1992, the RTC was winding down and was turning over its remaining assets to private firms. Van Sciver was asked to remain on as an Oversight Manager, but found this process inefficient and excessively bureaucratic. In late 1992 Van Sciver accepted a position with Oxford First in Cheltenham, PA, a receivables lender to several timeshare developers, as well as a financier of mobile home and second mortgage portfolios. “I had hoped to work there as a lender. But it turned out that I was expected to promote Oxford as servicing contractor for RTC and FDIC assets,” explains Van Sciver. “Unfortunately, I soon found this mission impossible, because it turned out that Oxford had difficulty servicing its own accounts.”
Van Sciver left Oxford First within six months to accept a job working with Jack Manoog at Diversified Resorts/Funding Services on Cape Cod, Massachusetts. Within a year following his departure, Oxford First filed for Chapter 7 Bankruptcy.
“I had met Jack Manoog in 1990 while working for the RTC – he was an extremely bright man who had made and lost several fortunes over the years in spectacular fashion,” says Van Sciver. “By 1993 he had re-built a small organization, and was running 3 companies: a timeshare resort called the Oak N’ Spruce located in the Berkshires; a commercial finance company called Funding Services based in Southeastern Massachusetts; and a land acquisition/development company called Fidelity Financial also based in Southeastern Massachusetts. All three companies had great potential, and Jack had expertise in all three areas and start-up capital. However, he needed additional management and outside financing in order to take his companies to the next level.”
Despite knowing little about Cape Cod, the chance to be a principal and an investor/owner simultaneously in a timeshare company, a finance company and an acquisition and development enterprise was alluring. Van Sciver moved to Cape Cod in February 1993, and his wife and two girls followed him in June. He was soon overseeing timeshare sales at Oak N’ Spruce as well as its Diversified Resorts’ timeshare portfolios, while raising capital, buying portfolios and standardizing lending procedures for Funding Services. At the same time, he was learning the finer points of land acquisition, construction and development from Manoog; and learning about timeshare telemarketing and lead generation from John Cahalane, the Director of Marketing for Oak N’ Spruce.
“At Funding Services, which was the fastest-growing of the Manoog companies, we were engaged in two entirely different businesses,” explains Van Sciver. “Basically, Jack made short-term construction loans to area homebuilders, and I acquired timeshare and vacation receivables portfolios. In addition to buying receivables from Oak N’ Spruce, we were acquiring small portfolios of timeshare and vacation receivables from developers around the country, at deep discounts. I enjoyed the receivables portfolio financing immensely. And although receivables accounted for only about thirty percent of our total business volume, we found it to be very profitable.
“As Funding Services became more and more successful, we sought a line of credit with a major bank for expansion. Unfortunately, the banks with which we were negotiating looked more favorably on construction lending than on receivables financing. They didn’t understand timesharing, and they were concerned that we were in two such divergent businesses.
“I considered leaving to work for one of the larger finance companies or banks buying and hypothecating timeshare portfolios. But their underwriting made me nervous. In my opinion, the larger finance companies and Banks were lending on slim margins, insufficiently discounting portfolios, not doing enough due diligence on the underlying resorts and the receivables, and just generally offering terms that were too liberal. It seemed to me it would only be a matter of time before some of these big finance companies and Banks would be suffering through the same type of timeshare workouts we had endured during the RTC days. By mid-1995, we had secured a long term, low interest bank line of credit for Funding Services, and I moved on to work with Maggie and create Whitebriar.
Creating Whitebriar
Van Sciver realized that in order to pursue receivables finance in the way he thought prudent, he would have to be on his own. At the same time, he had observed that consolidation and standardization within the timeshare lending industry had created a real opportunity for a creative “boutique” lender – a lender who could be flexible, move quickly and provide personalized service to smaller resort borrowers. So he withdrew some of his invested money from Funding Services and Maggie contributed some additional personal capital, and In July 1995, they incorporated Whitebriar Financial.
They named the company after Harry’s old family farm. “The name reminds me of my roots, my family, and that there is no substitute for hard work,” says Van Sciver. Only a week later, Whitebriar had acquired its first portfolio, in syndication with another investor. “The transaction was very successful. This was a good thing, because we had just purchased a home and office on Cape Cod and our third daughter was born soon after in October,” he explains.
Maggie and Harry Van Sciver have grown Whitebriar Financial significantly since 1995. Over the years their company has continued to buy select portfolios at deep discounts, and to lend sensibly against portfolios at premium rates. They also finance commercial receivables, and occasionally make equity investments or fund short-term bridge loans. “We have re-invested our profits into the company, and built a group of willing participants to provide additional working capital as needed,” says Van Sciver.
“At Whitebriar Financial we earn an appropriate return for helping borrowers achieve their objectives. Although we regularly make loans to Developers who have been turned down elsewhere, we never loan money on a losing proposition. If the Borrower will not make money or achieve some significant business goal by borrowing from us, we’re not interested in making the loan.
“By being open-minded and creative, we structure transactions where our Borrowers are ultimately more profitable with us than with a larger ‘cheaper’ finance company. Or we provide a service that our borrowers cannot find elsewhere – such as recovering lent or borrowed monies in a commercial workout or bankruptcy, or financing marginal credits or pre-construction sales. We also finance maintenance dues and inventory.
We earn our high rates by being quick, quiet and flexible for our borrowers. I liken Whitebriar Financial to a little naval destroyer, compared to some of the big battleships that are out there financing hundreds of millions each year. We are small, but we are able to turn around a lot more quickly – we can safely go places those big battleships cannot, and if we have to shoot, our aim is true.”
At Whitebriar Financial, the Van Scivers generally look beyond developer financial statements and pro formas. They focus primarily on: collateral, on the underlying resort, and on the Developer’s ability to service the financed customers for the life of the receivable – back to the four C’s Van Sciver learned from his mother and father at the Beverly Building & Loan – Collateral, Capacity, Cash Flow & Character.
Between Maggie and Harry, the Van Scivers have been bankers, borrowers, developers, portfolio servicers, Wall Street financiers, debt collectors and workout officers. Harry says, “We’ve heard most of the stories already, so we try to cut to the bottom line, which for us is simply: ‘How much money do you need, and how will you repay us?’
“Whitebriar employs practical business judgment to cut through excessive paperwork, restrictive covenants and other obstacles to our borrowers’ success” say Van Sciver. “We are streamlined, efficient and governed by common sense. So although we never hesitate to protect our position as lenders, we also do not waste borrowers’ time on insignificant matters. Because our borrowers recognize this, we rarely have problem loans at Whitebriar Financial, and we enjoy a pleasant relationship with our borrowers.”
Whitebriar’s typical portfolio purchase or hypothecation loan averages $500,000, but they have financed portfolios larger than $10,000,000 and smaller than $25,000. “We try to be as flexible as possible. Large or small, if a deal makes sense we usually find a way to say ‘Yes’,” says Van Sciver.
The company also provides other services: “Occasionally we act as confidential consultants to large developers and major financiers in the timeshare industry. We advise them on the value of their portfolios, we create stratifications, yield & cashflow modeling, and run-off/default projections. We also develop strategies to maximize their return, liquidate their position or minimize their risk. We occasionally engage in joint ventures rather than loans. And we sometimes make short term commercial loans for other business purposes.”
Association Involvement
The Van Scivers are active members of ARDA, and try to stay current on new developments in the vacation industry. “We have expanded carefully into financing travel club and campground receivables, as well as homeowner dues and vacation lot mortgages,” explains Van Sciver. “We even financed some cemetery receivables after researching the pre-need industry.” Whitebriar is a member of the Cape Cod Chamber of Commerce, the Community Associations Institute, and the International Cemetery and Funeral Association.”
What the Future Holds
The Van Scivers are continuing to find new challenges and opportunities in the industries they serve. “This is a fun business,” says Harry Van Sciver, “and we plan on staying around for a long time. I look forward to hearing from anyone who feels we can be helpful.”
Harry Van Sciver
President, Whitebriar Financial Corporation