Sustainable Communities, Inc

Non-Bank Financing was created to assure important sales of historic properties in order to maintain historic communities during the recession.

Financing Sales Transactions of
Historic Residences

This short article provides detail on what we discussed last week to help your clients sell properties at the highest “real” value in this troubled marketplace

The goal in structuring these new first mortgage notes is to be able to facilitate the sale of your listings on your website.

Seller financing is emerging as the solution to the decline in traditional lending, due to the sub-prime crisis. Increasingly, it’s also responding to the sluggish real estate market by offering a real alternative to conventional mortgages. With seller financing, more property owners are able to sell---often more quickly and at higher prices. It also allows many would-be buyers to purchase the properties they want.

What we will do is set up the following criteria for all buyers so that they have access to some alternative financing that will lower their cash requirement to buy the homes listed on your website.

Minimum credit has to be 700 mid FICOs (from all three bureaus) so buyers are able to invest only 10% cash down payments; eg, For a sale price of $750,000 a buyer WITH all 3 FICOs above 700 only needs to put down $75,000 in cash. We structure a new first mortgage at 6-7 % (depending on the value and location of the home) for 5-10 years. But payments are amortized over a 30 year period.

So:

Sale Price =                                           $ 750,000.00
Buyer puts DN   =                                  $  75,000.00
New first mortgage of                          $ 675,000.00 at 6.5% for example;

In this example, the buyer has a new monthly payment of $4266.46 for the first 5 years, then a re-finance is required or new financing needs to be found 60 months from the closing. [Depending on where the property is located, sale price, etc. and other institutional and / or private investors may sometimes write the note for a 10-year period or 120 months.]

Same example but credit scores are lower than 700. The buyer needs to invest 20% in cash or $150,000.00. This leaves a new first mortgage of $600,000.00 at a spec higher interest rate of 7.25% for 5 years (60 months) or $ 4093.06 per month.

In cases where the sale price is lower, e.g. for a $400,000.00 property, our mortgage banking operation can fund in all 50 states at up 102% LTV loan to value…at  a rate near 5-7% fixed for 30 years. BUT these buyers MUST be able to fully document their income for the last 3 years. In some cases only 2 years information is required.

In every case, we will look at all financial options to give the buyer of the home the best financing for their situation. And as I’ve said, every situation will be different.

For situations where we can structure the sale of a new house with two months paid note/mortgage, we can, and will, pay you a flat fee after we receive our funds of $500.00 to $1,000.00 in cash. From this money you are free to pay any of one of your listing brokers a % of these fees.

In cases where we have needed to arrange institutional loans up to 102% of the sale price, BY LAW we are forbidden to pay any referral fees. So we do not and cannot.

There is no limit to the funds we have available to buy these notes to arrange institutional funding. If you need $1,000,000.00 or $800,000,000.00 (800 million USD) we can fund either. The KEY here is THIS WILL facilitate the sale of these listings at the highest “real” value in this troubled marketplace.

Hopefully this re-confirms in your mind how successful this program can be to help all of your current sellers (and brokers) of homes sell, and buyers successfully buy, your historic homes at the highest value possible.  

Feel free to contact Rob or myself for any other issues.

Best regards,

Murray Marder

Please Call Anne at 866 450 8017 for further information.

Note: This is just one of the programs we are developing for sustainable historic development.
Please contact me directly to discuss specific projects. Robert Bailey 646 472 5213