Securities-Based Lines of Credit - The New No Doc Mortgage Alternative
In today's volatile lending environment, mortgage lenders have responded by eliminating stated income and no doc products, by decreasing LTV’s and by imposing stricter credit score requirements.
At least for the time being, the days of mortgage stated income, no doc loans and 100% real estate financing are gone. For this reason, securities (stock) secured loans and lines of credit have made a tremendous resurgence as an alternative to the lack of mortgage options and provide an excellent opportunity to achieve high LTV’s and funding flexibility by integrating a securities-secured loan along with or even instead of a mortgage loan.
Because stock loans are secured only by the securities asset itself and not real property, there is no painful underwriting process or expensive appraisal. Best of all, closing times are typically within a few days after approval.
Other benefits of this type of financing include:
With a low minimum portfolio value of just $200,000, our clients don’t have to be millionaires to take advantage of this type of financing.
US Best Capital Partners is proud to offer this groundbreaking product in the securities lending
market, a limited recourse, feature-rich loan made possible when an
eligible portfolio with optionable securities is available for use as
collateral. The resulting loan instrument allows a measure of security
in default not normally available with other securities-backed loan
structures. Other lending structures are also available.
Key Features
With all of these structures the stocks, bonds, or other securities
remain in borrower's title and account throughout the loan term.
Management is provided through top-tier U.S.-brokerages and licensed
account advisors at these institutions. A major international equity
fund brings leverage to the transactions allowing superior loan terms
over those normally available in most capital markets.
Collateral receives a simple lien to secure the loan. Closing is fast -
our target is three business days maximum from signing of loan
documents. Prepayment is permitted any time without penalty. Up to 95%
loan-to-value is available for many portfolios. Full voting rights
remain with borrower while shares secure loan. Securities may be swapped
for another set of securities of equal value mid-loan with lender's
consent. Additional loan cash possible if portfolio rises in value
during the loan term with lender's consent.
Underwriting Requirements
Publicly traded stocks,
municipal/state/federal securities, exchange-traded funds, and all forms
of mutual funds. $200K minimum portfolio size. Best loan-to-value will
be available for portfolio's over $2M in initial value. CMO's and other
mortgage-based securities eligible if bundled with other quality
securities.
Average Daily Volume
Healthy trading market for the securities; good volume of trading over
six months or more.
No Red Tape
Minimal paperwork, no FICO scores. Clients need only produce evidence of
assets sufficient to service loan payment pursuant to current
regulatory requirements.
Institutional Security
Title is never transferred during the term of the loan. Major U.S.
SIPC-member brokerage/bank administration ensures professional servicing
of loan from from start to finish.
No Penalty for Early Payoff
Loan payoff anytime without restriction. If prices go up and stocks are
worth more, for example, borrower may seek to unfreeze and sell them by
retiring the loan. Payoff can be effected by asking institutional lender
to allow sale of sufficient shares to repay obligation. Liens are
removed without delay upon repayment.
An "Equity Line of Credit"
Feature
A line-of-credit provision is available with lender consent. Allows
borrower to in effect modify loan mid-stream and take more cash out if
portfolio value increases. This is available when and if shares have
moved up in value consistently over time, much like a home equity line
of credit.
Growth in Portfolio to
Securities Owner
No asterisks, no fine print. All of the value in the portfolio belongs
to borrower in standard model securities loan structure. There is no
lender participation or claim to any of the upside growth in stocks if
they appreciate in value over time.
Dividends to Interest or Paid Directly
Borrower may choose to receive dividends from the collateral portfolio
directly, or to have them credited against the interest owed on the
loan.
Fast Funding
Within 72 hours of signing loan documents typical, though actual time may be slightly less or slightly more depending on the particulars of each transaction. Funds are deposited directly.