Fairview Commercial Lending Closing FAQs
Do you have a question not answered below? Please e-mail us.
- How soon can you close?
Typically we close on the deal anywhere from 2-3 weeks, however sometimes even sooner based on the needs of the client.
- Do you require an environmental?
Can the borrower use one if they already have one completed? Typically a phase one is required on each property. If the borrower has an environmental less than 6 months old and it meets our requirements we can typically utilize it. The environmental is ordered after our property inspection and the final commitment is issued. This is normally paid out of the closing proceeds.
- Can you do a 6 month interest reserve?
Yes, depending on the borrower’s cash flow we like to set aside an interest reserve to ensure that the borrower has a nice cushion so that they can focus on rebuilding their business, etc…
- How are you able to close without an appraisal?
We fund with our own capital and therefore are not bound by the same requirements as a traditional lender. All underwriting decisions are made in house by a team of seasoned real estate experts that understand the uniqueness of each market and each deal.
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- Do you have other closing fees?
We typically require a phase one environmental on each property as well as tax/insurance escrows, title, etc… The closing fees vary based on each market (for example transfer tax, etc.)
- Explain your pre-pay?
Each pre-pay is unique to the deal. It is typically a declining pre-pay.
- How is your pre-pay different from other lenders?
Most lenders impose a lockout or a very steep pre-pay (defeasance) that makes it impossible to refinance the loan in the first several years of the transaction. We never impose a lockout or utilize defeasance. Each of our transactions is structured to fit the needs of the particular borrower.
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- What is defeasance?
- Real Estate Weekly defines defeasance as a substitution of collateral. Typically, the borrower uses proceeds from a refinance or sale to purchase a portfolio of U.S. government securities that is sufficient to make all of the remaining debt service payments required by the note. The securities are pledged to the lender, and the lender releases the real estate from the lien of the mortgage. The note remains outstanding but is assigned by the borrower to an unaffiliated successor borrower, who makes the ongoing debt service payments.
- The penalties associated with paying off a loan that has been securitized in the secondary market can be extremely expensive. The penalty can be calculated at: www.defeasewithease.com or any other number of websites.
- Real Estate Weekly defines defeasance as a substitution of collateral. Typically, the borrower uses proceeds from a refinance or sale to purchase a portfolio of U.S. government securities that is sufficient to make all of the remaining debt service payments required by the note. The securities are pledged to the lender, and the lender releases the real estate from the lien of the mortgage. The note remains outstanding but is assigned by the borrower to an unaffiliated successor borrower, who makes the ongoing debt service payments.
- Do your loans have defeasance?
No, none of our loans utilize defeasance.
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