All Forum Posts by: Kyle Altenau

Before you reach out to the other lender, you may want to be sure the other lender knows about your junior position. If they don't it might be best they don't find out for as long as possible. 

I've been dealing with similar situations. I have my attorney draft forbearance agreements to extend. Part of the agreement deals with required reporting from the borrower. I'd ask to see the default letter, and proof it was cured. You can also throw things in like they must share all documentation related to the sale. I'd want to dig into that. Just because it is done and rented doesn't mean it's being marketed properly. I'd want to see the brokers BPO, the listing agreement etc and require that he reports maybe weekly on the status of the sale.

You can also charge a fee. Depending on how much you like them, I would charge anywhere from 0-1 points for 3 months. If it's someone that has been putting their best foot forward and trying to work with me, I won't charge anything. 

@Jerel Ehlert I actually disagree. The buyer and the lender are the two parties being insured. So if anything the seller shouldn't care much. 

I am a lender and as long as the title company is licensed and insured, I am happy to close with them. That being said, a few of the points that @Chris Mason brought up are absolutely true. Especially the one about call centers, or even just title companies that try to work nationally. It just doesn't work. When you need to see a deed restriction from 1925 in person because the scanned copy is illegible, you want someone local and familiar with the county to go down and there and get everything taken care of right away.

From my perspective, I also prefer a title company I know and trust to make sure the transaction closes smoothly. I've been involved in a ton of transactions where my attorney has questions or concerns and the title company will not be responsive. Then we finally get an answer a day before the targeted closing date and it's the lender's fault we need to delay closing. There can also be issues with Schedule-B exceptions too, especially with investment properties, that some less sophisticated title companies may cause issues with. 

All that being said, most title companies are fine. I doubt you will see too much price variance. The one thing some might try is to add junk fees that you can negotiate. But in most cases, I'd say it's best to go with your loan officer's title company. That title company will want to do right by you to continue getting the loan officer's business. 

You absolutely have to provide a credit authorization for a new transaction. Just because he can lift your information from an old deal does not mean you've authorized him. He would've needed you to provide your social and sign off authorizing. He can lose his ability to access and run people's credit reports for running unauthorized checks so I think he should be much more apologetic. You may not want to work with him because it could have been a calculated step to just get you "stuck" with working with him since he already ran your credit.

Notary situations can vary state by state and have never done a transaction in CA, but I have in most Northeast states and in everyone, I would 100% call that a junk fee that he is throwing at you so he can give you a "discount" without even giving you a discount. Typically you'll close with a title company, the closer from the title company is usually a notary, and notarizing is just part of their work and built into their fees. Again, this all varies by state though, so it could be different in CA. I'd check with some other local professionals in your network. 

From my understanding title costs are controlled closely by state regulations. So price may not very. BUT service can greatly vary from company to company. That being said, it's likely the lender wants to use theirs because they have a good relationship and can expect good service from the title company. If you didn't have a different one in mind, I'd just go with theirs. 

This looks like a classic scenario for a bridge loan, then refinancing into something more traditional with more favorable terms once the property is stabilized.

You said you have a plan to make it cash flow, does that mean the property is vacant? Does any work or fit outs need to be done? Is the $4 million based on previous leases or the value of the property as is? That will make a big difference in what bridge loans are available, and how much you'd have to bring. 

I am looking to purchase land for $220,000 cash and then hoping to find a construction to perm mortgage option after that. 

What kind of leverage are banks offering for these owner occupied scenarios? Will I be able to cash out some of the $220,000 once the construction is complete? 

What kind of lenders are best to approach? Community banks? Credit union? etc. I am located in New Jersey. 

Any other tips or advise in this scenario would be appreciated. I operate mainly in the commercial RE world so insight into residential lending would be helpful.

Some banks won't lend to principals that are out of state. Some will lend to principals that are out of their state if the subject property is in their state. Rules like these aren't uncommon but not necessarily standard across the board by any means. I would try a few more lenders.

Sam is correct about the foreign registration, but that'll just be an underwriting requirement. That wouldn't change the fact that you are out of state. 

I don't know anything about Anchor Loans or Aloha Capital, but I think you may be incorrect on a few points here. The discrepancy may be down to differences in state law or just misunderstandings. 

First - If Peerstreet buys a note from Aloha, their agreement can be set up so that Aloha still services the debt. There is nothing wrong with a third party servicing debt. It's actually quite common. Sometime investors prefer an originator use a third party to create some separation once the loan closes. 

Second - I am not sure what you mean about shorting investors. Can you elaborate? Are you saying they short pay loans that pay off even if the loan was paid in full? That'd certainly be illegal, but I can't imagine how you could even get away with that on a large scale.

Third - There are a handful of states that you need a license to lend commercial loans, but the majority of states it is perfectly legal. And quite common. If that changed I think it'd put a lot of people in a big capital crunch and really disrupt the market. 

You are absolutely right about contract law though and I think it's a good point to bring up. Just because another party puts something in a contract does not mean that it is entirely enforceable. There are definitely some shady people out there that might put outrages penalties or provisions in loan documents that try to take advantage of people that don't know better. It just drives home why it's important to have not just any lawyer, but a good lawyer.

@Brian Kantor from what I've been seeing, most banks are being very conservative right now and not doing any cash outs. They are happy to do rate and term refinances, but not allowing any cash outs. 

My guess is that a lot of banks have set floors with treasury well below that. So banks have much more incentive to lend and borrowers are still getting historically low rates. It's a win win. The downside, is banks are able to pick and choose what business they want to do. They can do business on good margins without having to leverage their portfolios too much by just doing rate and term and they have enough demand to just do that. 

What you may want to look at is doing rate and term with a credit union, then once the finance industry starts to go back to normal, you can refinance and get your cash out. The reason I say credit union, is that they don't charge pre payment penalties. The only thing you'd have to be wary of is burning bridges at a credit union. 

Another thing that you may want to keep in mind is that almost all types of lenders will be wary of someone owning and operating from overseas. Your best bet may be looking for someone to partner with that will remain local. It will ease any worries about you being overseas, and you can also try and work with someone with good W2 income as well. 

You'll of course give up some returns, but having boots on the ground that you can really trust is really important.