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Statement of Understanding – Hard Equity Loans
hank you for your hard equity
loan business. This
statement of understanding will explain the fundamental
differences between your hard equity loan and a
traditional, long-term amortized mortgage loan. Your
hard equity loan will fund the purchase of investment
property and the repair of that property.
You are requesting this loan to fund a business
and investment venture.
In taking this loan, you are not a consumer of a
residential mortgage loan.
The maker of the hard equity loan does not make
residential mortgage loans to consumers or any types of
consumer loans. They make only commercial, investor
loans secured by real property.
Please read and initial each item, sign at the
bottom of page two, and return by fax to 404/622-9683;
direct your questions to 404/622-1120.
PURPOSE OF THE LOAN
1._________I understand that the purpose of this loan
is to provide the funds for the purchase and repair of
investment property only; that the security of the loan
is real property but this is not a loan on my current or
future residence or the current or future residence of
anyone known to me.
TYPE OF FINANCING
2._________I understand that this hard equity loan is
not final financing on the property; that it is a
‘bridge loan’, or short-term, temporary financing
until the property is sold or refinanced or until it
matures, whichever comes first.
OCCUPANCY PROHIBITED
3._________I understand that during the entire time
this loan is in place, I may not, nor may any
other person or persons reside in, occupy or otherwise
dwell in the property under any circumstances.
Occupancy will result in loan default,
cancellation of the repair funds account, and the entire
amount of the loan will become immediately due along
with all applicable interest.
DUE DATES/LATE PAYMENTS
4._________I understand that the monthly interest
payments are considered to be delinquent if not received
on or before the 5th day of each month, and that a 10%
late charge penalty will be imposed for payments not
received by the 5th of each month.
Delinquency may further result in a change in the
interest rate on my note.
FORECLOSURE PROCEEDINGS
5._________I understand that because of the high-risk
nature of hard equity loans, once the loan has become
delinquent the maker will issue a default notice and
commence foreclosure proceedings.
I have until the end of the second month of
delinquency to bring payments current along with late
charge penalties. Any
foreclosure proceedings will result in additional costs,
attorney fees, and other fees added to my loan.
The delinquency will be reported to credit
reporting agencies.
DRAWS ON REPAIR FUNDS ACCOUNT
6._________I understand that no repair money will be
released if my loan payments are not current and that
repair funds disbursements are not intended to fund my
monthly interest payments.
7._________I understand that the repair funds are
held in a repair funds account and that I must request a
draw on this account to receive these funds, but only
after the repairs requested for disbursement are
complete. I
understand that receipts and releases must be provided
as proof of work performed, in accordance with the draw
schedule.
DRAW INSPECTIONS
8._________I understand that there will be an
inspection of the property each time I request a draw
and that there will be a fee charged to me of $100 for
each draw inspection.
This fee does not include rush disbursement by
wire or express mail; these items will be charged over
and above the draw inspection fee, but no more than the
actual cost of the rush disbursement.
The draw inspection fee and the rush disbursement
fee, if requested, will together be collected from draw
proceeds.
OTHER
INSPECTIONS
9.________I understand that the property will be
inspected before the loan is closed, inspected upon each
request for draw, and at other times, without notice, at
the pleasure of the maker of the loan.
I understand that I will pay for the initial
inspection at closing, draw inspections as requested by
me, but other inspections made by the maker of the loan
at other times will not be charged to me.
NO ORAL AGREEMENTS
10._______
I understand that all fees, payments, commissions,
concessions, premiums or compensation relative to this
transaction will be disclosed on the closing statement.
I have no knowledge of nor did I negotiate any
outside written or oral agreements relative to this
transaction. All
elements of the transaction known to me will be
evidenced at the closing and disclosed to all parties in
writing.
11._______
I understand that I cannot receive by gift or reward, or
request, solicit, demand or negotiate any monetary
compensation for myself or anyone directly or indirectly
involved in this transaction at any time.
All monetary aspects of the transaction are
contractual and in writing.
I cannot receive any money or anything of value
from anyone prior to, at the time of, or after the
closing unless this is disclosed to all parties,
documented on the closing statement and approved by the
lender, in advance.
I HAVE READ
THE ABOVE AND UNDERSTAND THE SPECIAL NATURE AND TERMS OF
THIS TRANSACTION.
__________________________________
___________________________________
DATE
Borrower
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