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Probate Loans

Borrowing on the equity of a property while in probate to settle an estate or to pay debts is becoming very popular. At JCL, we use private investors and are able to fund real estate loans that conventional mortgage lenders will not. Our loans are based on the equity of one or more properties which may be in the estate. If needed, with an attorney’s assistance, Administrators, Conservators, Guardians, etc., can obtain court approval borrow the necessary funds to pay debts or settle an estate.

If You Are an Executor/Administrator

A person signing as an Executor or Administrator can obtain equity-based mortgages for up to 50-65% of the property value, per lender’s appraiser. This depends on the type and quality of the property.

Interest rate premiums for first mortgages are typically above the equivalent term of a conventional (“bank” type) loan. Loan fees, most of which are paid out of the loan, are based on the borrower qualifications, property condition and complexity of the file.

Loans to Executors and Administrators may take as few as 10-15 working days to close if you have full court powers and there are no objections to the loan from other persons. Otherwise, a court order must be obtained and may take from as few as several days to several weeks or more to accomplish.

So, what can you do with mortgage financing? Here are just a few examples:

  1. Pay attorney fees
  2. Arrange a buy-out by other heirs
  3. Resolve dispute “work-outs”
  4. Provide quick funds for probate emergencies
  5. Pay Medi-Cal and other creditors
  6. Stop foreclosure
  7. Pay delinquent taxes
  8. Money for repairs
  9. Pay settlements and fund other legal actions

If You Are the Trustee of a Trust

Trustees and Professional Fiduciaries can obtain equity-based mortgages for up to 50-65% of the property value, per lender’s appraiser. This depends on the type and quality of the property.

Interest rate premiums for first mortgages are typically above the equivalent term of a conventional (“bank” type) loan. Loan fees, most of which are paid out of the loan, are based on the borrower qualifications, property condition and complexity of the file.

Loans to Trustees and Professional Fiduciaries may take as few as 10-15 working days to close if the trust provides for powers to encumber (borrow against) the property and there are no objections to the loan from other persons. Otherwise, a court order must be obtained and may take from as few as several days to several weeks or more to accomplish.

So, what can you do with mortgage financing? Here are just a few examples:

  1. Pay for elderly care or living expense
  2. Pay Attorney Fees
  3. Arrange a buy-out by other beneficiaries
  4. Resolve dispute “work-outs”
  5. Provide quick funds for emergencies
  6. Pay Medi-Cal and other creditors
  7. Stop foreclosure
  8. Pay delinquent taxes
  9. Money for repairs
  10. Pay settlements and fund other legal actions

The information contained herein is intended for information purposes only and should not be considered legal advice. Seek competent counsel for advice on any legal matter.
email: Rick Curtis

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An annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a guaranteed minimum amount, such as your total purchase payments.

There are generally two types of annuities—fixed and variable. In a fixed annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time that your account is growing. The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

In a variable annuity, by contrast, you can choose to invest your purchase payments from among a range of different investment options, typically mutual funds. The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, will vary depending on the performance of the investment options you have selected.

An equity-indexed annuity is a special type of annuity. During the accumulation period – when you make either a lump sum payment or a series of payments – the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. The insurance company typically guarantees a minimum return. Guaranteed minimum return rates vary. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum.

Variable annuities are securities regulated by the SEC. Fixed annuities are not securities and are not regulated by the SEC. Equity-indexed annuities combine features of traditional insurance products (guaranteed minimum return) and traditional securities (return linked to equity markets). Depending on the mix of features, an equity-indexed annuity may or may not be a security. The typical equity-indexed annuity is not registered with the SEC.
-email: Rick Curtis

The profit potential in private mortgages for the lender, and the clear benefits to the borrower, has helped this investment strategy gain notoriety in the investing community.

Private mortgage lending involves an individual investor taking on the risks and rewards typically held by mortgage lending institutions. This type of lending can offer good returns and low risk if structured properly, because it is secured against the actual property.

Private mortgages have several benefits to investors and borrowers. They allow borrowers who don’t qualify at traditional lending institutions to get mortgages elsewhere. Investors holding private mortgages can receive interest rates significantly higher than standard rates offered by banks.

The mortgages are usually short-term—from six months to three years—and typically based on the property’s equity value. In general, private mortgages hover between 50 and 70 percent loan-to-value (LTV). If investors need to get their money out before the loan matures or is paid off, there is the potential to sell the private mortgage to a number of companies that buy them.

Private mortgages can be used for commercial properties.

Different property types are generally covered by different LTV ratios. Although the valuation of a commercial property may be a little more challenging to ascertain, this is usually off-set by loaning at a lower LTV. Theorectically, a lower LTV on a property correlates with lower risk.

Loans are underwritten with the condition and value of the property as the primary criteria for approval. Secondary issues may include the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals are another key benefit. These loans are usually approved within days and are often funded in two weeks or less.
email: Rick Curtis