What is a First Position Commercial Mortgage?

A First Position Commercial Mortgage (FPCM) is a simple and secured opportunity for individuals to achieve their financial objectives. This private third-party loan provides higher returns with shorter terms secured by commercial real estate. Private lenders – with expert guidance and insight from us - select a commercial mortgage in inventory to serve as collateral for their private loan. They are recorded on the title and acquire a first lien position on the mortgage. Every lender is paid monthly interest from the moment they partner at a fixed annual 6% return. 

Why are they called First Position Commercial Mortgages?

The phrase “First Position Commercial Mortgage” describes the collateral pledged  as security for the loan you are making. As a private lender, you select a particular commercial mortgage  – with expert guidance and insight from us – to serve as collateral for the loan.  A First Position Commercial Mortgage loan is not a mortgage investment pool and is not a direct investment in real estate. They are also referred to as  First Trust Deed Loans or Senior Interest Position Mortgages.

What is a first position in commercial mortgage?

If you have a first position, that means you have priority over any other liens or claims on a property.  It puts you in control. As a commercial mortgage lender,  we would only execute  first mortgage transactions with commercial borrowers ensuring we hold the first lien on the property.

With interest rates so low, why do borrowers come to us?

In today’s lending environment, real estate developers and commercial borrowers are seeking out alternative financing that they can receive in 2 to 3 weeks, which is provided by partnering with lenders like you. We offer short-term bridge loans to commercial property owners based on the value of their property. The borrowers qualify for our mortgages because they are secured by the high value of commercial assets.

What types of property are used as collateral in these transactions?

Generally,  the mortgages are secured with commercial real estate, such as multi-unit apartments, office buildings, retail centers or mixed-use developments; though we sometimes accept as collateral non-owner occupied, single-family homes that are held as investment properties and owned by a corporation or limited liability company.

What are some of the terms of the mortgage given to the borrower?

Our commercial mortgage lending policies dictate that we lend for maximum loan term of two years and up to only 60% of the value of the real estate. That means the properties that secure the mortgages are worth considerably more than the loans themselves at closing.

What type of due diligence is performed on the properties?

 A rigorous title search to ensure only a first lien position and to thoroughly evaluate each property by conducting a comprehensive appraisal to confirm market value.

Are the properties insured?

Yes,  casualty insurance coverage is written and issued in-force on the encumbered property. This mitigates the risk of loss to the property’s value due to damage, destruction, natural disasters (earthquake, flood, tornado, hurricane, and mudslide) and the like.

What is a lender’s collateral?

With loan-to-value ratios averaging 60% or less, the property’s equity is your collateral.

What is the paperwork required to get started?

When you lend on a First Position Commercial Mortgage, you enter into a Promissory Note and Loan Agreement that set the terms under which you are  repaid.

How am I better protected from downside risk?

Your loan is secured by a hard asset,  collateral – the property itself. And we’re so confident in these notes that the company we represent partners with you by lending their own funds by holding a second lien position behind your first position. That way you can have peace of mind that the company is obligated to make the monthly interest payments and return the principal to you at the end of the term.

How do I verify that I hold a first lien position in the mortgage?

Upon request, we will provide you  with a copy of the title policy which indicates there are not other liens or claims above you. No exceptions!

Will my name appear on the land records of the property?

Yes.  the company executes and delivers the first lien position documents in your name and files the documentation on the land records in the relevant jurisdiction.

Does the borrower make payments to me?

No,  the Company is contractually obligated to make your monthly interest payments and return the principal at the end of the term, regardless of the status of the underlying loan.

What happens if the borrower does not make payments or defaults?

First Position Commercial Mortgage loans are private transactions that are separate and distinct from the pledged collateral. If a commercial borrower does not make the payments or defaults, the company we represent remains obligated and shall continue to pay your monthly interest payments and return your principal at the end of the term according to the terms of your Promissory Note and Loan Agreement. They assume the risk for you.

How am I taxed on a First Position Commercial Mortgage?

You should consult a tax advisor or accountant for tax-related questions specific to your situation; however, the IRS typically taxes payments on first lien position interest holdings as ordinary income. You will be provided a Form 1099 for all lenders.

How do I get started?

If you’d like to get started on purchasing one of the available First Position Commercial Mortgages:

Call us at 720-675-7661 to schedule an in-office appointment and free consultation.

Several Office Locations In The Denver Metro Area To Choose From.

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Direct:  ​​ (720) 675-7661

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