레이블이 Equity versus Debt인 게시물을 표시합니다. 모든 게시물 표시
레이블이 Equity versus Debt인 게시물을 표시합니다. 모든 게시물 표시

2013년 11월 25일 월요일

About 'debt and equity underwriting'|Carlton Raises $600 Million of Equity and Debt Amidst Capital Markets Mess







About 'debt and equity underwriting'|Carlton Raises $600 Million of Equity and Debt Amidst Capital Markets Mess








Investors               often               find               lenders'               requirements               for               title               seasoning               an               obstacle               to               selling               their               properties.

Holding               costs               and               declining               market               value               can               eat               into               profits.

Leaving               a               house               vacant               can               make               it               a               target               for               vandalism.

So...

What               is               title               seasoning?

This               refers               to               the               length               of               time               a               person's               name               has               been               on               the               title               document               recorded               on               a               piece               of               real               estate.

Lenders'               underwriting               guidelines               vary               as               to               how               long               a               person's               name               must               be               on               title               for               a               purchaser               to               buy               an               investor's               home               or               for               the               investor               to               refinance               the               property               and               cover               his               costs               to               rehab               it.

Why               did               lenders               institute               the               title               seasoning               requirement?

Can               we               say               mortgage               fraud?

The               scenario               goes               like               this:               Crook               #1               buys               a               house               for               $100,000               in               Week               1               and               sells               it               to               Crook               #2               for               $150,000               in               Week               #3.

Crook               #2               has               his               sister,               brother-in-law,               cousin               Marvin               appraise               the               property               for               $200,000               in               Week               #5               and               in               Week               #6               sells               it               to               Clueless               Buyer               who               is               so               afraid               of               being               priced               out               of               a               rapidly               escalating               housing               market               that               she               pays               him               a               $25,000               premium               over               his               asking               price               just               to               stay               out               of               a               bidding               war.

Problem               is,               Clueless               Buyer               is               often               a               figment               of               some               hot               shot               creative               loan               broker's               imagination               trying               to               score               a               commission,               points               on               the               loan               or               the               yield               spread               premium               from               the               lender.
               After               a               few               hundred               of               these               scenarios,               lenders               wised               up               and               wanted               to               believe               they               could               stop               property               flipping               (which               is               not               illegal).

Hey,               it               worked               great               -               right               up               until               about               2003.

This               is               the               year               many               lenders               started               to               find               ways               around               their               own               underwriters'               judgment               and               went               to               senior               management               for               a               "business               decision"               to               get               around               loan/title               seasoning               in               order               to               make               their               numbers               for               that               month.
               Knee-jerk               reactions               by               lenders               looking               down               the               barrel               of               Fed               regulations               have               really               hampered               the               efforts               of               honest               investors               who               could               instrumental               in               turning               the               mortgage               markets               around.

You               would               think               with               the               state               of               today's               real               estate               market               and               high               foreclosure               rates,               lenders               would               do               away               with               the               seasoning               requirement               all               together               to               get               the               loans               off               their               books.
               However,               many               lenders               will               not               waive               title               seasoning               requirements               and               have               even               extended               them               to               12               months               or               longer               on               properties,               especially               for               non-owner               occupied               homes.
               Here               some               tips               for               dealing               with               those               title               seasoning               requirements:
               1)               Good               news!

The               FHA               has               put               a               temporary               one-year               moratorium               (until               July               2009)               on               title               seasoning               requirements               in               order               to               move               the               glut               of               foreclosed               homes               on               the               market.

Even               though               this               moratorium               only               applies               to               properties               purchased               because               of               foreclosure,               many               lenders               will               follow               suit               to               clear               their               books               of               foreclosed               properties.
               2)               Use               a               land               trust               agreement.

If               the               seller               still               has               equity               in               the               property               that               he               can't               borrow               against               because               of               damaged               credit,               not               enough               qualifying               income               under               the               new               guidelines,               forthcoming               judgments,               or               he/she               simply               wants               to               get               out               from               under               a               burdensome               payment               and               move               on,               educate               this               seller               about               the               land               trust               and               how               it               can               benefit               both               of               you.

Once               you               acquire               a               beneficial               interest               in               the               trust,               find               a               bank               that               will               fund               the               trust               and               cash               the               seller               out.

This               should               leave               the               property               marketable               to               your               end               buyer,               who               can               then               get               new               FHA               financing.
               3)               Purchase               the               property               with               a               contract               for               deed.

This               is               a               form               of               seller               financing               wherein               you               (or               your               assignee)               will               make               installment               payments               to               the               seller               with               a               promise               to               pay               the               loan               in               full               at               a               later               date.

This               is               usually               done               by               a               seller               who               owns               the               property               free               and               clear.

However,               though               not               as               "in               vogue"               as               the               land               trust               right               now,               the               land               contract               makes               more               economical               sense               to               the               lender               (if               the               property               is               encumbered).

Run               a               hypothetical               scenario               by               the               lender               and               see               if               they               would               prefer               this               to               a               short               sale.
               4)               Buying               "subject-to".

In               today's               real               estate               market,               many               homeowners               will               still               just               hand               you               the               deed               to               their               property               because               they               just               aren't               capable               of               carrying               the               payments               anymore.

You               will               want               to               establish               if               there               is               still               equity               in               the               property               (the               borrower               may               be               deeply               in               debt,               no               longer               has               a               job,               or               an               illness               forces               him               to               give               up               the               property.)               and               reinstate               the               loan               by               catching               up               any               back               payments               and               fees.

To               avoid               triggering               the               due               on               sale               clause,               take               out               a               second               insurance               policy               with               you               as               beneficiary,               leaving               the               first               insurance               policy               in               tact.
               5)               Cash               is               king!

Even               a               little               bit               of               it               will               buy               you               some               hard               money               to               close               a               deal               that               can               then               be               sold               to               a               qualifying               buyer               with               new               conventional               financing.

Just               remember               that               many               hard               lenders               relying               on               foreign               investment               are               a               thing               of               the               past.

Either               have               plenty               of               equity               in               the               property               "as-is"               or               be               prepared               to               put               up               some               of               your               own               money.

At               least               they               won't               be               picky               about               seasoning.
               6)               You               can               still               buy               low               and               sell               high.

You               just               need               to               justify               your               new               higher               selling               price               with               invoices,               receipts               and               contracts               for               work               done               or               to               be               done.

This               is               one               way               to               satisfy               the               FHA's               rules               against               (perceived)               over-inflated               flips,               which               will               convince               them               to               insure               a               loan               to               your               end               buyer
               7)               Buy               an               REO               direct               from               a               lender               who               is               now               into               the               FHA               loan               game.

They               own               the               property,               you               buy               it               and               rehab               it,               and               take               them               the               borrower               to               get               new               FHA               financing.

This               is               a               win-win-win               situation.
               8)               Buy               new               construction               standing               inventory               from               distressed               builders.

They,               or               their               lender,               have               to               unload               their               properties.

If               you               must               hold               it               for               a               year               or               two,               these               properties               will               rent               quicker               than               less               desirable               properties.

That               will               definitely               meet               most               lenders               seasoning               requirement!
               9)               Reverse               many               of               these               techniques               to               get               new               buyers               into               your               newly               acquired               houses.

If               they               work               for               you,               make               them               work               for               your               buyers               -               at               a               profit,               of               course.
               10)               Buy               bigger               properties!.

Commercial               lending               is               filling               the               gap               where               residential               properties               are               falling               out               of               favor.

With               many               commercial               lenders,               5               or               more               units               can               fly               under               their               commercial               underwriting               guidelines.

Find               out               what               qualifications               they               are               looking               for               and               be               prepared               to               prepare               the               figures               for               them               to               make               your               case.

Seasoning               is               often               not               an               issue               with               them;               they               are               looking               at               the               return               on               their               investment               in               your               project.






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