When underwriting a loan, the primary focus of our
analysis is the intrinsic value of a property, which
is determined by considering a number of factors
including, without limitation, location,
potential for alternative use, current and potential
net operating income and local demographics.
We also examine the credit worthiness of a borrower
or its principles and take into consideration its or
their ability to meet the operational needs of the
property and the experience of the borrower or its
principals in the real estate industry.
Because of our emphasis on fundamental property
value, we believe that in the event of default,
foreclosure and acquisition of title to a property,
we will generally be able to liquidate the property
favorability and quickly.
We originate mortgage loans in a number of ways.
We rely on the relationships developed by our
officers with loan originators, real estate
investors, commercial real estate brokers, mortgage
brokers and bankers.
Loan approvals are based on a review of property
information as well as other due diligence
activities undertaken by us, including a site visit
to the property, an in-house property valuation, a
review of the results of operations of the property
(if any) or, in a case of an acquisition by our
borrower, a review of the borrower's projected
results of operations for the property, and a review
of the financial condition of the prospective
borrower and its principles. If management
determines that an environmental assessment of the
underlying property is necessary, then such an
assessment is conducted by a third-party.
Final loan
approval is generally quickly issued after the appraisal is
received on the property. We generally obtain
a small non-refundable cash payment allocable for
legal and other expenses from a prospective borrower
at the time of issuing a final commitment. Our
loan commitments are subject to an appraisal and
clear title to the property.
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