Whole Loan Mortgage

Security / Collateral
Firstbanc offers whole loan investments at no more than 70% loan-to-value or “LTV”. Loan-to value is a basic loan analysis calculation that indicates the percentage of equity remaining in the property after the loan amount. So a 70% LTV means that 30% of the value remains unencumbered as extra security for the loan. The loan to value is determined by an appraisal or by using the tax assessed value.

All of our appraisals are completed to our strict specifications and only by approved and experienced appraisers. Each approved appraiser must complete our application, have five or more years experience and provide us with samples of their work. We carefully review all of this information before finally approving that appraiser. Once approved, the appraisals they provide us with are review for their compliance to our guidelines. Only after it is determined that the appraisal is acceptable do we move toward closing.

The tax assessed value is typically represents a fraction of a property’s value. While this fraction varies by taxing authority it represents a responsible valuation of the property. When the tax assessment is utilized in determining LTV the assessed value is divided by the valuation ratio to result in an estimate of the full present market value of the property. FIRSTBANC uses the tax assessed value to determine the market value of a property in cases where the loan-to-value is very low and property valuation is not a major underwriting concern.

In the case of a loan on a property that requires some renovation work the property is appraised to determine the after renovation value or “ARV” and to verify the estimate of the cost to renovate the property. The renovation costs are kept in escrow until the work on the property is completed. When a given milestone is reached we send the appraiser out to the property to verify completion of the work and if the completion is certified by the appraiser we release the funds for the work done. This methodology ensures that the escrow is not fully disbursed until the renovation work is completed.