Alliance Portfolio private
lending formula and philosophy is to originate well underwritten
and well secured “institutional quality” real estate
loans while taking advantage of the flexibility afforded through
private money lending. As a direct private equite finance company, our philosophy when evaluating and underwriting
a potential loan opportunity is based on what we call The
Three C’s: 1) Capacity, “Can
they pay?” 2) Character, “Will
they pay?” 3) Collateral, “If
they don’t pay, are we OK?”
1) Capacity, “Can they
pay?”
Does the borrower have the ability
to make the monthly payments? A borrower’s capacity is
measured by: income, job position, stability, overall financial
standing, including: assets, liabilities, and net worth. To verify
borrowers’ capacity to pay, Alliance Portfolio requires
that the borrowers state their income on the loan application.
In many cases we include tax returns, bank statements and verification
of cash deposits or other assets.
2) Character, “Will
they pay?”
Often times, borrowers show they
have the capacity to pay; however that doesn’t always mean
they will pay. The borrowers’ character and desire to pay
are based on their past performance in handling credit. Alliance
Portfolio runs a complete credit report providing payment history
on existing loans including the number of late payments and credit
references to verify the borrowers’ character and desire
to pay.
3) Collateral, “If
they don’t pay, are we OK?”
This is the BIG ONE!
The collateral is the backbone and security of all our loans.
Alliance Portfolio is an direct equity lender. The market value
of the property is critical in Alliance Portfolio’s
decision in making any given loan. Our policy is to lend only
up to 65% Loan To Value (LTV), requiring at least 35% protective
equity in the property. The protective equity is the difference
between the market value of the property and the indebtedness
secured by the property. The lower the LTV and the greater the
equity, the more incentive for the borrowers to protect the equity
in the property (i.e., sell or refinance the property) if unable
to make payments on our loan. To verify the market value of a
property, Alliance Portfolio requires an appraisal to be
completed by an approved independent appraiser. In addition,
Alliance Portfolio is committed to lend specifically on properties
located in our identified “back yard,” visit each
property and personally meet each borrower.
At Alliance Portfolio, our
goal is to build a loan servicing portfolio comprised of well
underwritten and well secured real estate loans. We are not collectors
of property, rather collectors of interest and fees. Alliance
Portfolio limits its loan origination to Southern California, primarily Orange County, coastal San Diego and Los Angeles Counties. By limiting our loan-to-value ratios, Alliance
Portfolio achieves maximum security through increased levels
of protective equity.
