Sponsor / Key Principle

[Dan Dares TM]

Question..... Does anybody know if a bank will qualify a sponsor that has the net worth but does not have a schedule of real estate?  I'm wondering if I could use a family member with a high net worth on my larger multifamily deals. 

[Stuart Udis]

Yes it’s common to have an additional guarantor who has a balance sheet added as a credit enhancement. However, lenders want to see the additional guarantor receive consideration in return for their guarantee. This is because there’s well established case law that states a lender can only hold a guarantor personally liable if there was a benefit received. This translates to ownership or a fee, but most lenders want to see ownership. Also, the lender wants to see liquidity from the co-guarantor.