Bridging the Gap in Residential Acquisition and Development Finance
Loan Terms
Structure:
First-mortgage that finances land acquisition and horizontal lot development
Will provide term debt for developed lots and vertical financing as part of a broader relationship
Land Banking and Development: In some cases Woodland Lending will acquire finished lots which are subject to bindingagreements with capable homebuilders to purchase the finished lots
Amortization:
Based on homebuilder contract with a sizeable at-risk deposit
Typically results in payback within 8 to 24 months
Average duration of 14 months
Collateral:
Single-family residential real estate, typically to-be-developed land or developed lots
All zoning, entitlements, approvals, etc. are in place or risk associated with approvals is fully mitigated
Takedown contract with capable home builder in place at closing (at risk deposit)
Security:
First mortgage and collateral assignment of leases, rents, entitlements, rights, etc.
Additional collateral taken as security when deemed necessary
Full personal recourse or development guarantees provided by credit worthy individuals
LTV/LTC:
LTC: < 85%,
LTV: Typically no greater than 65%, value stressed during underwriting
Term:
12 to 24 months
Funding occurs during first 6-9 months of term as development occurs
All advances reviewed and approved by licensed third party inspectors
Economics:
10.0% current interest rate
2% Origination Fee
Servicing:
Normal construction loan servicing process conducted by experienced third party servicing firm
Monthly inspections by certified inspectors to verify work completed
Woodland Lending reviews inspections and approves all monthly advances according to servicer’s recommendation