First Capital Trust Deeds closed on a luxury home private money construction completion loan in the hills above Silicon Valley for a developer specializing in spectacular properties.
With construction completion loans the first hurdle to overcome is securing lender’s title insurance in the form of an ALTA extended 125% lender’s policy, which needs to be fully underwritten by the title company. The coverage protects the lender against future mechanic’s liens that may be recorded on Title. In this case, the borrower was very experienced building in this higher-end luxury market, had the assets and liquidity required by the title company to qualify, and the completed project was more than satisfactory.
After getting title coverage, the private money financing part usually goes relatively quickly.
FCTD worked with a California investment fund specializing in million dollar and above loan amounts that had funded several projects like this in the past, including some for FCTD’s luxury builder clients. After meeting the developer, walking the property, the loan closed relatively quickly within one week of receiving title coverage. The lender also held back 12 months of payments in an escrow account for the borrower, which we’ve done in the past on high-end luxury properties. It’s an added security that lenders like and borrowers appreciate on high-dollar loans that carry large monthly interest payments.