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Presents

A Securities-based Line of Credit for Real Estate Professionals

Not an offer to buy or sell securities nor a tax avoidance method.. .

Please consult with a licensed tax advisor before proceeding..

The Obstacle

Get financing quickly to real estate investors who need it. Restrictions have been increased and limitations dramatically tightened across the board for all types of real estate investors. Traditional Fannie Mae or Freddie Mac lenders have added restrictions designed to limit postrecession risk, even for those with superior credit,

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Not an offer to buy or sell securities nor a tax avoidance method.. . Please consult with a licensed tax advisor before proceeding..

The Grim Reality

LTV limits are significantly lower than ever. Government requlation is far tighter across all financing types Stated income lending limited or prohibited Strict limits now apply to any investor seeking to use FNMA and FHLMC financing for multiple properties (property caps) Second mortgages, home equity lines very difficult to obtain now Traditional mortgages limit or prohibit rehab investors Hard money loans very tight with similar limitations Extraneous costs no longer financed automatically. Listing fees, appraisals, marketing costs, property management fees or loan payments on unoccupied properties commonly written out of the loan agreement
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Not an offer to buy or sell securities nor a tax avoidance method.. . Please consult with a licensed tax advisor before proceeding..

The Solution

A securities-based line of credit that does not require the client to transfer title out of their name, and does not involve the sale of the securities to fund the loan, all managed through a major, licensed, fully regulated U.S. stock brokerage/banking entity. These loans are in the form of a credit line where every clients securities are in a typical SIPC-insured account, with full online access. A handy credit line like this comes with none of the restrictions of other real estate lending programs, and can allow real estate investors to access cash immediately and act quickly in the market.
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Not an offer to buy or sell securities nor a tax avoidance method.. . Please consult with a licensed tax advisor before proceeding..

The Basics

Interest rates: Rates vary depending on the credit line amount. Rates depend on size of the collateral portfolio as well as client preferences (e.g., fixed or floating monthly LIBOR-based rates.) At present, rates range from a low of approximately 1.2% to as high as 5% against outstanding principal. Line of credit terms (length): There is no specific term for floating rate credit lines, which can be tapped and refilled by paying down some or all of the principal at clients leisure. Credit line is maintained by payment of monthly or quarterly interest. Client may exit without penalty at any time. Value of securities collateral should remain within a reasonable range, but lender seeks long-term client relationships and will always work with client to support credit line to the extend possible throughout.
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Not an offer to buy or sell securities nor a tax avoidance method.. . Please consult with a licensed tax advisor before proceeding..

More Basics
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Loan to Value: From 70% to 95% depending on the securities. Government securities, which pose little risk of value decline, will always obtain the highest LTVs. Securities that are volatile, or collateral that is small in total value (under $250,000) will normally obtain lower LTVs. Licensed lender analyst reviews each portfolio. Documentation: The credit line is in effect a limited document loan in that it is not underwritten based on credit, income or debt ratio, but is determined rather on the value and risk of the securities. Lenders primary concern is that there are no liens or tax issues outstanding prior to permitting the credit line, since these could impact lender right to claim the collateral asset should client default on repayment. Fast Closing: The entire process from start to finish is designed for speed. Closings can take place in as few as five business days if all client moves quickly. Credit lines are available immediately for drawdown.
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Not an offer to buy or sell securities nor a tax avoidance method.. . Please consult with a licensed tax advisor before proceeding..

Qualifying Securities
What Doesnt Qualify
Private company stocks Restricted stocks Stocks with little or no trading volume Real Estate Medium-term notes (MTNs) Standby Letters of Credit (SBLCs) Some foreign securities 401K - Managed pension plans

What Does
U.S. and selected non-U.S. stocks Mutual Funds U.S. Treasury notes/bills/strips U.S. government agency bonds Municipal and corporate bonds Selected bank CDs
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Fannie Mae, Ginnie Mae CMO Exchange-Traded Funds (ETFs) Publically traded REITs Unit Investment Trusts Selected bank CDs Fine artwork

A Sampling of Application Scenarios

Generating or Increasing Your Down Payment
A larger down payment can mean the difference between closing a real estate investment opportunity or losing it.

Rehabilitating Property for Quick Resale

Speed is of the essence when fixing up properties for resale. Our securities-based institutional credit line can quickly get all the cash needed for the purchase and all expenses as well.

Outright Purchase of Real Estate

A quick, institutional, low-interest credit line with no property limitations allows you as investor to pay cash for your properties thereby avoiding the delays associated with traditional mortgages or hard money loans.
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More Scenarios
Pay Down Existing Mortgage to Refinance
A securities-based line of credit gives real estate investors a means to pay down an existing mortgage. This can be the path to refinancing a property at todays very low rates.

Cover Hard Costs of Real Estate Investments

Successful real estate investing requires cash, and lots of it. If you are a real estate investor you need to move quickly to take advantage of opportunities and thats where your securities-based, high LTV credit line can make the difference. In addition, you can now bypass todays restrictions on including property listing fees, appraisals, marketing costs, property management fees and other expenses. A securitiesbased line of credit can be used to finance all these items at low rates.
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And More
Bridge Loans
A securities-based line of credit can be a perfect, very-low-interest alternative to a conventional bank-provided bridge loan. Because your financing is through a low-interest credit line, you can borrow as much as you need (up to your authorized limit of course) and repay as quickly or as slowly as you wish. Most bridge loans come with interest rates signficantly higher than those you will be offered via this credit line.

REO/Fix and Flip

Real estate investors interested in purchasing bank-owned properties to refurbish and flip (sell) quickly will find a securities-based line of credit wellsuited to the task. If this describes you, with our securities-based financing facility you will be able to draw funds to cover acquisition and all related costs, potentially creating a true no-out-of-pocket costs investment. You will be able to pay back your credit line quickly as well, making the funds readily available for your next project.
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Security and Powerful Features You may have decided that youll have to pick one or the other when it comes to securities-backed financing: Strong security, or client-friendly features. This lending program offers both.
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Top-tier, fully regulated and licensed lenders SIPC-insured institutional accounts No title transfer securities stay in your name No third-party accounts: shares stay in your account at lender No sale of securities to fund loan as with transfer-of-title loans Prepay anytime (floating rate loans) All dividends paid to borrower All upside appreciation to borrower Limited-recourse option No up-front fees Free consultation with professional advisor prior to loan docs
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Please consult with a licensed tax advisor before proceeding..

Not an offer to buy or sell securities nor a tax avoidance method.. .

Visit our website at www.abnicholas.com for questions or to apply for a securities-based credit line request.

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