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Where can I find an product for commercial mortgages, similar to PMI on home mortgages?

If a bank asks for 25% equity on a $3,000,000 loan and we want to put down 10%, is there a product that will guarantee payment to the lender for the other 15% in case of a default??

If so, who offers such a product?

Answers

Topic Expert
Joseph Ori
Title: CEO
Company: Paramount Capital Corporation
(CEO, Paramount Capital Corporation) |

Yes, its usually a letter of credit, however, you must have great credit and a good banking relationship. The only other way to cover the equity shortfall is a second lien loan, although, they are also difficult to arrange.

Anonymous
(President) |

Thank you!

Topic Expert
Gabe Burke
Title: Corporate Real Estate Specialist
Company: Cushman & Wakefield (formerly DTZ)
LinkedIn Profile
(Corporate Real Estate Specialist, Cushman & Wakefield (formerly DTZ)) |

There is commercial mortgage insurance available but the type you need depends on whether your commercial property is owner-occupied or an investment property. If your business occupies 51% then you are considered owner occupied. Which one are you?

Mike Hallmann
Title: President
Company: Lantern Associates
(President, Lantern Associates) |

This property will be owner occupied

Jeffrey McCandless
Title: Managing Partner
Company: Stone Harbour Partners
(Managing Partner, Stone Harbour Partners) |

I'd strongly suggest looking at an SBA commercial mortgage loan. This product gets you the desired LTV position and provides a bona fide guarantee to the lender. This sounds like a typical SBA transaction that fits well into this product. I've had many clients who swear by the product.

Anonymous
(President) |

Thanks, but we are a non profit and as such can't qualify for SBA- Sorry I didn't describe our situation more clearly, but I certainly appreciate your assistance!!

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