A discount note is where the bank needs to get loans off their books-both non-performing AND, performing. The reason many banks are note discounting is so the FDIC does not come in and take the bank over due to not having the required equity.
Give us a Call Today at 866-400-8630, We Close More Discounted Note Loans than Anyone!
We have one client that had an outstanding loan of $1.7 million. The property values had fallen and, the place only appraised for a million. The property cash flowed to support a $600,000 loan and, the bank accepted the pay off. He lopped off $1.1 MILLION in debt! BECAUSE THE NOTE HAD BEEN CALLED MONTHS AGO AND, THE LENDER DID NOT WANT TO TAKE PAYMENTS. HE HAD NOT MADE A PAYMENT IN 6 MONTHS! We did a private money loan through our fund and, closed it in a few weeks. Six (6) months from now we will refinance him into a longer term vehicle at conventional rates and, the client is fired up!
It can work on purchases too. We have one client that is being offered a group of 6 shopping centers that the bank has foreclosed on. The outstanding loan is $13 million, the properties recently appraised for $11 million, they cash flow net about $850K and, this borrower can buy them for $7 million if he will close in 30 days. That is $3 million of free equity-HUGE. We have the resources to close that loan in a couple of weeks with no appraisal!
A discounted note deals are typically bridge loans so they can close the deal quickly. Because discount note loans are closed quickly many times, a new appraisal is NOT even needed.
Properties don’t have to be distressed to need note discount deals although if you have time and, the note is current, there are conventional options available. We have seen deals where the bank just wanted the loan off their books to improve their reserve requirements even though the loan was performing. We had to document that the loan was performing but, we have done straight refi’s where the borrower was able to lop hundreds of thousands off of what they owed simply by refinancing it off the banks books. Right now, banks are looking hard at moving some debt off their books.
If you need help with your commercial refinance loan on your building or looking at purchasing a building where the loan is being discounted, give us a call Today at 866-400-8630 or 512-650-8630. We close more discounted loans than anyone!