Answers for Lender's
|Answers to many common questions for lender's can be found here.
If you need more assistance contact Customer Service
- What is the minimum investment loan I can make?
- What is the average investment loan amount required?
- Is my investment loan a security by definition?
- How do I become one of your Lender's?
Currently our minimum loan is $20,000. If you would like to fund smaller loans Contact Us and we will keep you name on file should we lower our minimum loan size.
Generally $50,000 to $200,000, however, we have had multiple requests in the multi-million dollar category; the largest request to date has been $15 million.
Complete our lender information form so we can determine your level of interest. We will add you to our lender list. We will send out emails with the loan scenario as they come in. The first lender to send back a signed Commitment to Lend Agreement will have the first opportunity to fund the loan.
The Loan and Terms
- In whose name is the loan closed?
- Who is listed on the deed?
- What is the typical loan term?
- What length of time is needed to close a loan?
All loans are closed and held in the name of Equity Based Lending, LLC. We service all of our own loans.
The deed or title is in the borrower's name. Equity Based Lending, LLC has a note, and deed of trust, mortgage or other lien on the asset pledged for collateral for the loan.
Typically 6 - 18 months, however, there is a 3-month minimum interest paid if paid off prior to maturity. There is no pre-payment penalty (other than the 3-month interest minimum). We also offer transactional funding loan opportunities where the borrower only needs the funds for less than a week to fund the purchase side of a double closing. These loans will pay a flat fee for the short-term use of funds depending on the equity position and the amount of the loan.
Typically, 7-10 days, however, we have closed loans in as little as 3 days after clear title or ownership is confirmed, and the funds are in the closing attorney’s escrow account.
- What is your loan underwriting success rate to date?
- What about other types of potential lenders for these assets?
About 10% of our loans have actually gone through the foreclosure process. We coordinate the foreclosure proceedings with a foreclosure attorney under either of the 2 lender options in the event of borrower default. To date each foreclosures have had a positive outcome.
Our borrowers have typically exhausted every potential/possible source of alternative financing when they approach us for a loan. If the asset to be pledged for the loan collateral meets our risk parameters, we will make the loan and are often the lender of last resort.
- What if a loan is made on an "Other Asset"?
- Will your firm loan on other types of assets?
- What is my exposure if Equity Based Lending, LLC does not perform on my loan or goes out of business?
- How do you know that the value of the property and the true cost of the repairs are accurate?
- How is the investment secured?
- Why is the loan-to-value ratio so conservative?
- How much exposure (loan to value) will be at risk?
- Do you require an appraisal for the assets or collateral?
- Do you ever require a borrower to put up additional collateral if needed in order to properly secure the loan?
If the "Other Asset" securing the loan requires specific storage, security, insurance and/or other special requirements those expenses are the sole responsibility of the borrower and we make all of the arrangements to our specifications. All assets must be insured for a minimum replacement of the appraised amount and Equity Based Lending, LLC is listed as an “Additional Insured” on the policy.
Yes, provided the collateral meets our value parameters. Refer to the "Other Assets" section. We also must be able to secure and/or control the asset pledged for collateral until the loan is repaid in full, and we must have feasible options to liquidate the asset for a profit in the event of a borrower default.
Each lender receives a pledge agreement from Equity Based Lending, LLC tying the specific property/collateral in which the investment loan was made to the specific lender. The lender would replace Equity Based Lending, LLC and assume the same position becoming the holder of the note, deed of trust, mortgage or other lien instrument on the collateral pledged to secure the loan. Hence, all monthly interest payments would go directly from the borrower to the lender.
Randy Stone, owner of Equity Based Lending, LLC is a licensed General Contractor and has been in business for over 15 years. In addition, he is a very active real estate investor and has a portfolio of over 40 homes. If the renovations are extensive or we are uncomfortable with the estimated value, we will require an independent appraisal for the after-repairs value. All "Other Assets" will have an independent appraisal.
The loan is closed in the name of Equity Based Lending, LLC as we are the servicer of the loan. We have a recorded note and deed of trust, mortgage or other lien instrument against the collateral pledged for the loan. We collect monthly checks from the borrowers and send monthly checks to the lender. In the event of non payment we take the necessary legal steps to acquire or sell the asset to recoup the funds.
We are a “no doc” asset- based lender. Our sole remedy in the event of a borrower default is to take possession of or sell the collateral pledged for the loan. Therefore, we are not comfortable with higher ratios.
Our typical loan is 50% of the after repaired value, however, in the case of a rehab we will sometimes extend that to 65% and secure the additional exposure with additional collateral. The loan to value ratio of "other assets" is typically less than 50%.
We attempt to evaluate all residential assets in house and subscribe to multiple online services. If we are uncomfortable with the evaluation, we ask the prospective borrower to pay for an independent appraisal at their expense and we choose the appraiser. All appraisers are paid in full prior to the appraisal. All commercial real estate, land and “other assets” will require an evaluation from an independent appraiser. We put the borrower in contact with he selected appraiser and the borrower pays them directly.
Yes. This can be accomplished in many different ways and is at our sole discretion. For example, this is often done when a renovation is involved because the value may decrease below our risk parameters during the demolition phase.