Occasionally we’ll receive applications for financing new construction or improvements on existing Continuing Care Retirement Communities (mix of Independent Living Apartments, Assisted Living, Memory Care, Skilled Nursing). The financing occurs under a Master Trust Indenture which is how the obligor adds new loans to a pool of existing liabilities secured by the total pledged assets of the company. Our security in the collateral [all assets of the CCRC operation, including the structures] is described as being on a pro rata basis, which I believe means no lender would have priority interest. A more technical description is found here under the heading “Tax-exempt lending issues†(a little outside my understanding):
https://www.rmahq.org/lending-to-continuing-care-retirement-communities/Our legal team provided me this response to describe our interest in the security:
"The MTI is between the Obligors and the Trustee. When a new loan that intends to be covered by the Trustee is issued then the Trustee must issue a Master’s Trustee Authentication Certificate that certifies that the new loan/credit is an Obligation covered by the Trustee.
As I see it the Bank’s security is an interest in the collections made by the Trustee of the monies paid by the Members or through enforcement against the Pledged Assets. We do not file any lien. The Trustee could file appropriate lien documentation. I suppose that it could be argued that the Bank indirectly has a lien on the assets because they are subject to the Trust and the Trustee’s interest which will be used to satisfy Obligations under the Trust, but please note that the Bank can take no action against the Pledged Assets. Any action has to be under the provisions of the Trust and will be taken by the Trustee provided the required number of holders direct such action when required."
So the question: Is there a lien securing our obligation (even if the lien is filed by the Trustee, rather than The Bank)? Does this middle step exempt this from being HMDA, or does it not matter what party actually files the lien?