Featured Loan59% LTV Mid-Construction Completion Loan in Beverly Hills
Loan Amount: $3,000,000
Loan-To-Value: 59% LTV
Situation & Challenge
There were three challenges on this loan.
1. Title Insurance for mid-construction refinance loans always adds an extra layer of complexity. Title insurers underwrite these properties and the borrowers more thoroughly due to the higher probability of mechanics liens becoming an issue down the road. Borrowers with liquidity are approved quickly for title insurance.
2. COVID-19 becoming an issue for lenders. The hard money funds that are structured to originate and sell loans to bond fund managers have frozen as the bond funds have stopped purchasing loans from these hard money lenders, effectively cutting off dozens of lenders in California that were selling loans to the same 2-3 bond funds.
*This loan needed to be placed with a portfolio lender that would hold the loan on their books through maturity in 12 months.
3. What’s the current and future value of this home? How long will COVID-19 impact the housing market and the overall economy?
Solution & Result
FCTD placed the loan with a Southern California-based real estate investment firm that also manages a large portfolio of private money loans. This portfolio lender was comfortable with the borrower’s overall financial strength and lengthy track record. Plus, they felt comfortable with a 59% LTV position even if the housing market fell 10-20% in coming year.