Comments on: Ask Us: Where are individual TIC loans headed?

By: thefrontsteps

thefrontsteps — Mon, 10 Nov 2008 20:54:28 +0000

Jeff,

If you’d like to contact “the banker” to learn more, drop us a line at thefrontsteps@gmail.com, and we’ll put you in touch.

By: The banker

The banker — Mon, 10 Nov 2008 20:47:03 +0000

Fannie and Freddie do not limit the amount of borrowers on any given loan, so one option would be to split the property in .25% interest and split all fees, payments, etc. in 4.
The loan would be based off the lowest credit score of the 4 borrowers, and the income/asset qualifications would be set in place for the property type, SFR, duplex, etc.
I hope this helps. . .

By: jeff albrecht

jeff albrecht — Mon, 10 Nov 2008 19:25:16 +0000

Kelly,
Four of us would like to get together in this tough economy and purchase a house together- pool our equities in one property, do a little remodeling and almost own the property free and clear. The problem is that a fractional loan would be the best since we would like to not be tied too closely and come and go without having to refinance the whole property.

Do you know of any programs fannie mae or freddie mac may have hidden in the corners somewhere, that I could present to a local lender. I am hearing this idea taken up more and more as the economy continues to tank. We are all seniors but I think this concept is going to catch on with all age groups of singles and maybe a couple here and there.

By: Kelly

Kelly — Sat, 16 Feb 2008 13:03:17 +0000

Anon – currently there are only a few banks that are offering these loans, with Circle Bank and The Bank of Marin being the leaders. I spoke with Circle Bank officials the other day at a CAMB tradeshow and even though they would like very much to have a secondary market for this loan product, it just doesn’t seem likely. We have a big demand here, but on the bigger scale there isn’t much of a need.

there is a secondary market for Jumbo loans, it just isn’t as reliable as the lower loan amounts where Fannie Mae is buying them.

7% is a great rate for a fractional loan, congrats!

By: anon techie

anon techie — Sat, 16 Feb 2008 06:02:23 +0000

anon8mizer, the point here is that when the loans are sold off. The issuing bank doesn’t have to deal with the loan and it’s risk is grouped with billions of other dollars in loans. The fractional TICs are kept on the books at the issuing (and smaller local) bank. Some of this is, I think, similar to why jumbo’s cost more than conforming loans.

As I am entering into a fractional TIC loan myself as we speak (7%), I am very curious about the author’s perspective on the future of this loan product. I once heard e-loan was entering the business, but now I understand that is not the case. I also once heard that there might be a future where these loans could be packaged and sold off. Any news on that front?

By: anon8mizer

anon8mizer — Fri, 08 Feb 2008 23:26:22 +0000

Interesting observation here:

“The banks who make these [fractional TIC] loans have to keep the loans on the books until they are paid off. A more common mortgage is bundled up and sent to Wall Street where it is sold, replacing the money the originating bank laid out so it can lend some more and make more money.”

According to SF Chron article, the fractional loans that the banks have to keep on their books have performed very well during this subprime debacle. It is the “common mortages” that are bundled up, repackaged and repackaged beyond recognition and sold to the investors that have defaulted.

But … the individual franctional loans are charged at a higher interest than the common loans?

I dont know about you… but I had always thought the higher the risk, the higher the interest rate, and vice versa.