construction – permanent loan?

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One Response to “construction – permanent loan?”

1. BLCOHEN529 on: 13 October 2009 at 12:25 am

   Dear Sung,

   Your lender was not only within their rights to restructure your financing, but, I seriously doubt you would have construction lenders willing to accept a second lien position behind your original financing. It certainly was not the only way to place the deal together, but obviously the manner that minimizes the lenders potential risk. In this manner they maintain you as a customer as opposed to dividing the loan and giving you an opportunity to refinance the second $200,000 at some future point. Obviously, they could have subordinated the first lien to the construction lien, but now they have arranged take-out financing to minimize risks all around.
   You are free to walk away from the proposed deal but do you expect, in this market, to other lenders ready, willing and able to commit to both a construction and take-out loans?

   You should be shown a draw schedule to show your construction engineering foreperson to ensure it meets your required financial needs at the vital relevant times.

   The disclosure requirement for construction loans are not a severe as those for consumers. It should not surprise you that there exists missing details, but this is an appropriate time to investigate, with your legal counsel, the specific applicable disclosure requirements to answer your questions and mitigate the likelihood of future unwanted surprise. You may be provided additional paperwork in connection with the take-out financing.