I'm having trouble working thru a loan request and need help fast. I'm working on a request for two loans and I think it's above the guidelines for SLTV, but others don't.

The first loan is to purchase the residential lots. The second loan is for construction of homes on those same lots. My LTV on on acquisition loan is 90% and we are limiting advances to 75% of cost on the second construction loan.

Do you agree with me that these loans will be above supervisory loan to value? The guidelines say "A bank may use the higher appropriate LTV ratio when actual construction begins on the next phase of development." Only problem is I don't know when the first advance will occur on the construction line.

The first loan does exceeds the LTV guidelines. Are you making separate loans on the home being constructed? If you are keeping the advances to 75% of cost, it doesn't sound to me like the second loan would exceed the LTV guidelines based on the information that you state.

You're already over on the acquisition loan - improved property alone is limited to 85%. Since this is not owner occupied you will always have to say under the 85% threshold.

Nope. One large construction loan for the whole addition. That's were the confusion is (to me). If the first loan is in violation, doesn't that mean that the equity of 25% per house might be forfeited to make up the loan to value of the first loan? Does that make sense?

75% of cost for construction really doesn't mean much to me in this equation. I have seen $150,000 homes constructed and they are placed on land that costs $500,000. Without hard numbers it is hard to say. You also don't say anythin about appraised values.

If you are planning to shave down the LTV over the life of the loan by using the 75% advance rate - I would say that is going to depend on your regulators. I have seen them totally over look the initial advances being over the LTV and I have also seen them blow a cog.