Here's How It Works
A mortgage broker has a client needing a $7,000,000 loan, which represents 70% of the $10,000,000 acquisition price of a property. The client requires the loan for only six months, during which time the broker will arrange institutional financing. The client, however, is unwilling to pay hard money rates or be saddled with a prepayment penalty. The solution is a 60%LTV first trust deed loan in the amount of $6,000,000 from Lone Oak at 8.9% to 9.5% interest and 1 point and a 20% LTV to 10% LTV junior loan in the amount of $2,000,000 to $1,000,000 at, say, 12.5% interest and 4 points from a private money source.
The result: The broker delivers a financing package that provides his client with the leverage he needs at the blended interest rate of 9.9% and 1.9 points to 1.4 points, and there is still room for the broker to add on his fee.
Brokers who bring their clients to Lone Oak to piggyback can expect to receive a call when Lone Oak has a borrower who needs additional funding through a junior loan. Lone Oak refers loans to brokers with whom it does business as an accommodation. Lone Oak does not accept commissions or fees for these referrals.
