Still a Bridge Loan ... Maybe

Posted By: lrj

Still a Bridge Loan ... Maybe - 08/02/11 03:28 PM

Still a Bridge Loan

I was reviewing this post and I have a similar loan but with a twist. Borrower has been unable to sell the property so LO wants to term out the loan for 7 years based on 25 year amo. The primary source of reduction is the sale of the property which will be used to paydown the loan. When the property is sold, borrower can refinance the balance or continue to repay until maturity. It seems like this is still a bridge loan. My preference would be to renew it for another 12 months and officer can still require payments, but it would be a cleaner bridge loan. Thoughts?
Posted By: Dan Persfull

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:35 PM

Can you convince me, or more importantly an examiner or judge, that a 7 year balloon loan with a 25 year amortization is a temporary bridge loan?

IMO it would not be a temporary bridge loan if it is termed out.
Posted By: Kathleen O. Blanchard

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:35 PM

I agree with Dan. You have to draw the line somewhere and 7 years is "a bridge too far".
Posted By: lrj

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:40 PM

what about just renewing it for 12 months, but asking the borrower to make monthly payments?
Posted By: Dan Persfull

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:50 PM

IMO that becomes a 12 month balloon note and would be a short term loan and not a temporary loan.
Posted By: lrj

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:52 PM

thank you
Posted By: Kathleen O. Blanchard

Re: Still a Bridge Loan ... Maybe - 08/02/11 03:58 PM

Yes, amortization changes the nature of the bridge loan.