With the delay of Title III of the JOBS Act and states continuing to roll out their own legislation around crowdfunding, we will see continued growth of platforms that have state-specific offerings. What are Maximum loan to value ratios?
At CrowdTrustDeed, we ensure that Sponsors are most interested in the preservation of an Investors principal investments, and because of this, we seek out Sponsors that originate extremely conservative loans. The key to underwriting secure loans is substantial equity in the property, which is demonstrated in low Loan-to-Value ratios. Typically, a financial institution will lend up to 80%, 90%, 100% or even more of the value of the real estate securing the loan, leaving little or no equity protection. At CrowdTrustDeed, the LTV’s are subject to the limits below, resulting in a higher average protective equity cushion for our Investors. The LTV ratio is determined by dividing the total encumbrance (Loan) by the value of the property.
The aggregate principal amounts of the notes or interests sold, including the balance of any senior encumbrances, are subject to maximum loan to value percentages. The percentages are based on the current market value of the property as determined by the broker or appraiser as required by Section 10232.6. The maximum loan-to-value (LTV) percentages are:
- Single-family, owner-occupied - 80%
- Single-family, not owner-occupied - 75%
- Commercial and income-producing properties - 65%
- Single-family residentially zoned lot or parcel which as installed offsite improvements including drainage, gutters, sidewalks, paved roads, and utilities as required - 65%
- Land that has been zoned (and, if required, approved for subdivision as) commercial or residential development - 50%
- Other real property - 35%
The percentages above can be exceeded when and to the extent that the broker determines that exceeding the percentages is reasonable and prudent considering all relevant factors pertaining to the property; however, in no event can the aggregate principal amounts of the notes or interests sold, including any senior encumbrances, exceed 80% of the current market value of improved real property or 50% of the current market value of unimproved real property