About Remington Financial Group, Inc. - What's Happening in the Capital Markets

A supply and demand imbalance in the commercial real estate capital markets will provide investors with an unprecedented opportunity to generate equity-like returns for debt investments.  This same imbalance presents Remington with an opportunity to assist more distressed developers and owners who seek financing.

The Liquidity Crisis

The supply of commercial real estate debt has shrunk dramatically, especially in the US.  According to the Mortgage Bankers Association, CMBS represents some 20% of all commercial loans.  Further compounding the liquidity problem is the fact that most commercial banks are not in a position to extend credit to new borrowers because they are struggling to manage their deteriorating commercial loan portfolio. 

Remington Financial Group, Inc. - Why Use Hard Money

In the US alone, some $1.2 trillion in commercial loans is estimated to mature in the next four years. This significant demand causes the imbalance.

A hard money loan is easily recognized by some distinguishing characteristics, most notably its ability to close quickly. Although a hard money loan typically carries a higher loan to value and more costly rates and fees, borrowers continually turn to this unique loan because most times it can move from start to close in 30 short days.

Why would a borrower need to close a loan in 30 days? It turns out there are many reasons that a quick turn around might be necessary. Two examples include:

Taking advantage of a low cost property

A borrower is aware of a piece of available property that is near the site of a soon-to-be-built shopping center. The land owner will sell the property at a lower cost, but only if the deal can close in the next 30 days. By securing a hard money loan, the borrower will pay higher rates and fees, but can close quickly knowing that she will earn a significant return in a year when the shopping center's construction is complete and the land's value has increased.

Avoid foreclosure

An individual's lender is about to foreclose on his property unless he can repay a certain amount within a short time period. The property is worth $10 million and the borrower owes $1 million against it. If the property is foreclosed upon, all of the property's equity will be lost. Although a hard money loan carries high fees and rates it enables the borrower to meet the aggressive repayment timeframe and save the equity in the property.