What ratios to look at for loaning private money? LTV, LTC?

[Dewayne Perry]

I'm wanting to get into PML. I understand the after repair LTV should be no more than 65-70%. But I'm more confused on the LTV prior to rehab. Let's say a property cost $300K and needs $150K for rehab so total cost $450K. I saw another post where someone recommended to cap the LTC at 88%. So $396K, leaving the borrower to bring $54K into the deal. But the problem there is what happens if the borrower immediately runs off with the money? The $300K went to the seller and now the borrower has $96K in his pocket. If I foreclose on the home I'm still going to be out quite a bit of money. So I think I'm missing something here.

Is it the case that rehab costs are only given as reimbursements as opposed to upfront? So loan 88% of $300K, which would be $264K, borrower puts up $36K as a down payment, then self funds the $150K rehab and I reimburse after he pays for the rehab? Is that how it works? If so, at what point exactly would I be reimbursing the borrower? And if they have the money to pay for the rehab upfront, why do they need to borrow money from me for the rehab?