When a prospective borrower contacts MEC, we immediately begin to assess whether the project meets our underwriting criteria. We gather data on the experience level, financial, and credit background of the borrower, the current and future value of the project and will ask for a summary of the proposed deal.

It is a plus if the borrower, or representative, is prepared with the following crucial information at the point of initial contact: property address, purchase price, rehab or new construction budget, future expected value, payoff strategy (sale or refinance) and expected timing of exit. If a proof of funds is needed to help secure the acquisition of the property, we can assist with that as well.

We can typically tell the borrower whether or not there is a good chance of MEC funding the loan after a 10 minute conversation. If there is, then we move to the 2nd stage of our process, which is, Underwriting.

If the loan request meets our basic underwriting criteria, we will ask the borrower to:
 

• Fill out a loan application

• Provide a purchase contract for the property

• Provide a written anticipated scope of work for the property

Once the above is completed, we will schedule an appraiser to inspect and appraise the property. As we proceed, we will ask for additional documentation that relates to the borrower’s experience, cash availability, income and credit. We will also want documentation regarding the project contractor or builder, property title history and property insurance. All of our loans are to entities, not to individuals, so we will need to have the formation
documents and EIN for the borrowing entity. All the paperwork must be in our possession prior to the close, but we can schedule the close, if needed, under the assumption that some paperwork is in process.

Loan closing generally occurs at a title company office, although it also frequently occurs at an attorney’s office. At the close, there are typically two transactions that occur – the property purchase and the loan settlement. Our staff will have reviewed all the necessary documentation prior to the close so there will be minimal complexity or stress at the settlement table. With respect to the loan settlement, our borrowers will be required to sign a variety of real estate loans related documents which will include (but are not limited to) a mortgage, note, security agreement, personal guarantee,investment affidavit and assignment of rents and leases. We will have already sent loan proceeds to the settlement agent, so after all the documents are signed and reviewed by the various parties to the loan, we will approve disbursement of loan proceeds either to the escrow agent for future disbursement, the seller of the house, or directly to the borrower.

On a rehabilitation or new construction loan, we will release the portion of the loan dedicated to the renovation or construction project in stages. Each installment will be released to the borrower’s (entity) bank account at the completion of a particular draw stage upon completed inspection of work. Generally, the period of time between initial draw request and money being wired is 3-4 days.

In addition to draw management, MEC services the loan by providing support for requests related to insurance issues and interest payments.

In the event that you pay off your loan prior to maturity, we do not charge a prepayment penalty. In fact, it is always an exciting moment when we receive a borrowers request for loan real estate loans payoff. We will work with the settlement agent to make the process as timely and straightforward as possible.