Standard Loan Information

Amount

$1,000,000 to $20,000,000 and sometimes larger (usually multiple Lenders with individual undivided interests).

 

Minimum

$100,000 per lender per loan, but preferably more.

 

Term

12-18 months (if current, term may be extended if approved by Lenders).

 

Interest

14.0% per annum, commencing on day of funding to title company.

 

Payment

Interest only monthly, with principal due in full at term. The monthly interest only payments are usually held in escrow for disbursement of monthly payments as they become due.

 

Default

In the event that the Note, secured by the 1st trust deed, should be in default, the Note rate of interest at the time of default shall, without notice, increase by four percent (4.00%) per annum, to a total of eighteen percent (18.0%) per annum.

 

Borrower

Usually a corporation or partnership, with personal guarantees from the principals in addition to the 1st trust deed on the property.

Collateral

The security for the loans are 1st trust deeds on real estate. The real estate may be land only (unimproved or improved), but often the loan is a development loan for construction of offsite and onsite improvements.

The collateral and loan terms of each loan are reviewed and approved by each Lender.

Loan-To-Value

The values of the subject properties that are collateral for the loans are determined by appraisals or by comparable sales in the area if the values are readily ascertainable.

The loan information presented will reflect a "loan-to-value" (LTV) percentage, which is the amount of the loan as a percentage of the total estimated value of the collateral.

Example:

 

 

.....Loan

$1,000,000

= 55.6% LTV

 

________

 

.....Collateral

$1,800,000

The loan-to-value percentages for most 1st trust deed loans are as follows:

Land and Development Loans = 50% to 59% LTV

Construction Loans = 60% to 69% LTV

Other

  1. The loans are always processed through a title company, usually Old Republic Title Company, which will issue a lender's title insurance policy to guarantee a 1st trust deed position.
  2. All Lender funds required to fund a specific loan are made payable to the title company. No funds are taken in trust by Eagle Mortgage Company, Inc.
  3. All development loan funds are transferred from escrow at closing through an independent construction control company, with funds being released directly to general and sub-contractors as the construction progresses. Labor and material lien releases are required by the construction control company before funds are released. Engineering firms or Eagle Mortgage Company, Inc. do inspections in addition to city or county building inspectors. No funds are released from construction control without the additional approval of Eagle Mortgage Company, Inc., as Lender's Representative.
  4. All costs and fees are paid by the Borrower, including any legal costs for loan documentation and/or to enforce the collection of the note.
  5. There is no prepayment penalty for early payoff of a loan.
  6. The deed of trust normally contains a due-on-sale provision, however partial release provisions are usually available upon payment of specified principal reductions in the loan balance, plus accrued interest.
  7. All Lenders must execute a Loan Servicing Agreement in which they agree to operate as a unit and grant Eagle Mortgage Company, Inc., authorization for certain and specific tasks related to the note and trust deed.
  8. All Lenders must execute the standard disclosure documents of Eagle Mortgage Company, Inc. as required by the State of Nevada.

Memo

The loan-to-value percentage should not be confused with the reserves or cushion for an investment or loan. For instance, a certificate of deposit versus a 1st trust deed loan might be compared as follows:

Certificate of Deposit

 

1st Trust Deed Loan

 

$6,000 FDIC reserve

= 6% cushion

$2,000,000 land

= 200% cushion

_______________ 

______________

$100,000 C.D.

$1,000,000 loan

Disclosure

Money invested through a mortgage broker is not guaranteed to earn any interest or return and is not insured. Before investing, investors must be provided applicable disclosure documents.

 

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