• PostCOVID fresh start loan. A borrower may need to catch up and give themselves breathing room for accrued and differing payments, which is referred to as a“ fresh start loan.”
• Payoff loans coming due or past due: Refinance and pay off existing first, second, and third lien position loans that may be due. Sometimes, refinancing the second and providing cash out is the appropriate answer to the loan request. Loans are available for both owner and nonowneroccupied residential and commercial properties.
• Cashout for any reason refinances are based upon the protective equity of existing real estate. Cashout loan proceeds can be used for most business and consumer purposes. The Federal Government and some states, such as California, require a special license to engage in consumerpurpose lending.
• Junior lien or secondposition loans on both owner and nonowneroccupied dwellings for business purposes
• Construction completion, rebuilding, or upgrading properties in poor or marginal condition: The loan is usually necessary because the collateral property or the borrower needs to meet bank underwriting guidelines in its distressed or partially completed state. Loan approval by the lender will consider the asisvalue and the ascompletedvalue.
• A borrower may own and operate a cashbased small business with limited financial strength. A lender will require 3 to 6 months of personal and business bank statements. The borrower is still required to prove they can make the required payments.
• Leveraged existing real estate equity developed over time to borrow additional funds, purchase other investment properties, or invest in a business enterprise.
• Purchase a property with a cash down payment, sweat equity, and seller’ s agreement to carry back a subordinated junior lien. The property seller would have the borrower sign a promissory note and a deed of trust with a set interest rate, payment schedule, and due date. The subordinated second is recorded concurrently with the first trust deed, but with a recording number after the first.
• An inherited property where family members and successor trustees who are beneficiaries need funds to distribute to the beneficiaries, pay the estate’ s legal costs, or fix up the property for a future rental. Another option is to fix it and sell it on the open market.
• Loan on unimproved raw land. Lending on raw land can be a complex process. Is the land part of an existing subdivision referred to as an infill lot, a commercially or industrially zoned parcel within a subdivision, or a larger parcel held for future development? The borrower may need to use the property as collateral to raise funds for future entitlements, including engineering, architecture, various reports, and fees to develop a fully entitled parcel ready to be built. The borrower would pay the loan off as part of the construction loan.
• Retail strip and community centers, industrial or other properties requiring upgrades or repositioning: Many centers are distressed due to the COVID shutdown vacancies, where tenants could not pay rent.
• Fixandflip loans allow highfrequency purchasers to purchase distressed properties, rehabilitate them with the expectation of resale, and turn a quick profit. Borrowers need both experience and some of their capital at risk.
• Litigation settlements: A loan to buy out a business partner, pay off a pesky family member, an exspouse, a judgment lien, or a partition suit.
• Pay off civil judgments and liens, including arrearages in property taxes, association dues, and federal and state tax liens.
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