- Once we have a verbal agreement from the borrower(s) and you, the Lender, to do the Loan, we will create the Loan Package to complete the transaction.
- The Title Company will prepare a preliminary title report for your review.
- Level 4 Funding LLC will complete the Loan Servicing Documents
- Servicing will know which bank to send the payment to.
- The Title Company will contact you with wire instructions to wire your funds to the title. You, as the Lender, will have your bank wire the funds directly to the Title Company.
- The Title Company will have the borrower(s) sign and notarize all documents and record the Deeds and Deeds of Trust.
- Once completed at the Title Company, the Company will send us the Original Signed Documents within 24 hours. The Title Company issues a Title Insurance Policy and sends it to you directly, but it can take up to 30 days.
- We will make copies of the documents for our files and forward the Original Signed Documents to you via UPS.
Frequently Asked Questions:
How does the Lender (you) get paid? The borrower(s) makes the monthly payment to Evergreen Loan Servicing, who will process the payment and send the payment directly to your bank via an ACH Wire Transfer “Direct Deposit.”
How fast do you get paid? If the borrower(s) pays on time, your payment should be in your bank account within three days.
Are these consumer loans: No, they are non-owner occupied loans, no consumer loans.
Are there any deductions to the payment? No, you receive all of the payments directly to you.
Can you, the Lender, process the Loan yourself? Yes, you can. However, I do not recommend that you do it. The Loan Service will handle any problems collecting the funds and contact the borrower(s) when they do not pay according to the agreement. The fees for processing the Loan are paid by the borrower(s) and are at no cost to the Lender.
If the borrower(s) is late, do you, the Lender contact the Borrower? No, that is what Loan Servicing handles for you. The Loan Service will impound taxes and insurance and make timely payments for taxes and insurance.
Can the Lender use another Loan Service? No, not on the setup, but you can change the service after setup. If you want to move your Loan to another servicer, you can. The cost associated with the transfer is your responsibility.
Does Level 4 Funding LLC receive compensation from the Loan Service or Title Company? No.
Can Level 4 Funding LLC process the Loan? No. As mortgage brokers, we are prohibited by State Law from Loan Servicing.
Can the lender (you) make money if you foreclose? No, if there is a foreclosure and the property is sold, the proceeds from the sale go to you, the lender but only up to the amount owed for principal, past interest, and fees. Typically the default rate is 29%, and you make this rate during the foreclosure. Any remaining money goes to the borrower(s). Lenders have never lost any principal or interest on any deal.
How long does it take to foreclose? On commercial loans, the minimum time is 90 days.
Who is the Trustee on the Deed of Trust? First American Title Insurance Company, a Nebraska Corporation P.O. Box 2922 Phoenix, Arizona 85062.
How many foreclosures were there to loans created by Level 4 Funding? Over the past three years three loans resulted in foreclosure. Lenders have never lost any principal or interest on any deal.
Is your Investment at Risk? Yes, call me to discuss the details. Lenders have never lost any principal or interest on any deal.
What is the Mortgage to Value or LTV of a Deed of Trust Investment? The LTV or Loan to Value ratio is the ratio between the Loan and the real estate value pledged as security, which is expressed as a percentage.
This is referred to as the Loan-to-Value Ratio:
Loan = $225,000
Value= $650,000
LTV= 34.6% ($225,000 divided by $650,000)
This means that the Loan, expressed as a percentage of the property's value, is 34.6%. The higher the loan-to-value ratio, the greater the lending risk because the protective equity declines as the LTV increases.
Example: A single-family home with four bedrooms and 2.5 baths is valued at $425,000.
If we make a 70% LTV, the Loan is $297,500. ($425,000 X .70 = $297,500) The difference between the value of the property and the Loan is $127,500. This is referred to as protective equity or equity cushion.
What documents will you receive in the transaction? For you to make an informed decision, you should require the following in your package:
What documents will you receive in the transaction? You will receive the following documents in your package:
- Mortgage Summary of the Trust Deed Investment
- Notarized Assignment of Deed of Trust to you Promissory Note
- Personal Guarantee from the borrower
- Title Report for the Title Company
- Lender Title Insurance ALTA Policy
- Homeowner insurance with you added as the additional insurance Mortgage Application of the borrower.
- Credit Report of the borrower
- An appraisal from an independent, certified appraiser, a CMA or BPO
- Mortgage Serving Agreement
