FAQs

Why we care about whether or not a property is rural relates to both how we source capital for loans and assess the risk of a mortgage default. This is one of the most ambiguous aspects of underwriting a mortgage, and how we evaluate property location depends on whether we are providing short-term mortgage debt or long-term rental financing (e.g., a 30-year mortgage):

• Short-term mortgage: We rely on geographic characteristics to determine if a property is rural. Those characteristics are location in a metropolitan statistical area (“MSA”) with less than 75,000 people, in a city or town with less than 7,500 people, more than 30 miles from a commercial hub or airport, and in a local area that does not show gridwork from a satellite view from Google Maps. If a property valuation reports a property is rural, that is a consideration in deciding.
• Long-term mortgage: We rely on the appraisal to determine if a property is rural. We use the above geographic characteristics and USDA designation to determine if the appraisal designation of rural status is reasonable. If we believe it is not reasonable, we may dispute the designation with the appraiser. Ultimately, we do rely on the appraisal because of how we fund long-term rental loans through institutional capital partnerships and securitizations.

We only require one guarantor and signer with at least 25% ownership of the entity.

For short-term loans, there is no prepayment penalty. For rental loans, if you are within the prepayment period, the penalty will be assessed on the principal paydown amount.

Prepays are on a step-down basis, meaning that if it’s a 5-year prepay, then 5% of the outstanding principal balance is charged if the loan is paid off in the first year, 4% the second year, 3% the third year, etc, and after the 5th year there is no prepayment penalty. For a 3-year prepay, it’s 3% the first year, 2% the second year, 1% the third year, and then no more prepayment penalty afterwards.

 Lower rates and lower fixed costs (loan fees and third party closing costs). A porfolio loan requires at least two properties within the same state.

No

We have standard release provisions of 120%. If you had a portfolio loan at 75% LTV with property values of $100k, $150k, and $200k, and you decided to sell the $150k property, your payoff for that property is $150k * 75% * 120% = $135,000.

We do not. Usually, lenders that offer these loan programs don’t offer the best long-term rates. Your overall cost may be equal to or greater than acquiring with a bridge/renovation loan and refinancing into our rental loan once stabilized.

Details about our draws process are available here. Assuming timely submission of information to us, we try to fund draws within three business days.

Yes, and such mortgages must be originated as a nonrecourse loan. We require a sponsor to meet the eligibility criteria for the product being originated, but we do not collect a personal guarantee.

We only do hard pulls for rental loans; we utilize soft pulls (which do not hurt your credit or show up on your credit report) for short-term mortgages. Credit pulls are good for 90 days.

There are many different versions of FICO, and there are also other scoring models that are not FICO, such as a VantageScore. The ones you see from CreditKarma and credit card portals are often not the same scores used in hard pulls for the mortgage industry.

More details: https://www.myfico.com/credit-education/credit-scores/fico-score-versions

We require title insurance on our loans, which a lot of local auction properties will not have. Some online auctions go through a closing agent that provides title insurance, but the borrower should check with the seller/platform.

Checking, savings, and money market accounts. We can also consider retirement accounts, stocks, and HELOCs at 50% of the balance.

Purchase contracts (if purchasing property), scope of work (if value- add investment), leases (if property is a rental), and property access contact (name, phone, email).

Yes, at higher rates and lower LTV. We will underwrite to operating history instead of a lease.

90% LTC means our total loan amount is 90% of purchase + rehab. However, the initial amount that we lend is that total loan amount minus 100% of the rehab. For example, on a $275k purchase, $40k rehab, $400k ARV:

• Total Loan Amount = 90% * ($275k + $40k) = $283,500 Initial Loan Amount = $283,500 – $40,000 = $243,500
• Down Payment = $275,000 – $243,5000 = $31,500 (11.54% down)

This is the equivalent of saying the borrower’s down payment is 10% of both purchase and rehab = 10% * ($275k + $40k) = $31,500, and we essentially take their 10% portion of the rehab and provide them a holdback of 100% of the rehab.

Lock extension fees are listed here on the pricing grids.

1. Property is not in a state that we finance or in a location that an appraiser would consider rural
2. Property value or loan amount is below our minimum (or less than $40,000 per unit for multifamily)
3. Credit score under our minimum or borrower has major delinquencies over the past 4 years
4. Liquidity < $25,000 or not enough to cover down payment, closing costs, 3-6 months of payments, or rehab reserves
5. Newer investors taking on extensive rehab projects