January 03, 2013While foreclosure activity in the US has dropped every quarter of the past two years, according to market researcher RealtyTrac, there are still homeowners who are underwater in their mortgage and looking for a solution. MFG Capital Group is stepping in across the country, including in the triad, to help. The company, in business for 20 years, specializes in loans for people that have mortgages that are greater than the appraisal value of their home, otherwise known as being "underwater."
Company representative Mel Jewell described MFG Capital Group as "a bridge loan specialty finance company providing short-term loans collateralized by Real Estate or other quick-sale collateral." He explained that the bridge loans are designed as an interim solution prior to the client obtaining long-term financing. Jewell and MFG Capital Group are targeting the purchase and restructure of both residential loans and commercial loans.
The company is focused on homeowners who want to keep their home, who have a loan of more than $417,000 and who are current on their payments.
"When a homeowner is heading toward foreclosure, it can take anywhere from six to 18 months to get through the process before the bank takes the loan over," Jewell said. What MFG Capital Group does is go in, buy the mortgage from the bank or mortgage company and help get the situation under control. "We help get the property below the appraisal price so if the homeowners want to sell the house, they are in a position where they can," he explained.
Jewell stressed that MFG is not interested in owning the underwater properties, however. "We want the people living there, or if it's a commercial property the people who have rented the location, we want them to keep the property," he said.
The company can assist property owners whose loans are anywhere from 10 to 30 percent more than the property's appraisal value. Jewell said he finds that it is still tough for people to qualify for mortgage loans with many banks.
"It's not like it was six or eight years ago," he said. "We go in and negotiate with the bank or mortgage company and try to buy those loans. Most of the time we're successful, and we get 60 to 70 cents on the dollar for the appraised price." MFG Capital Group's goal is to modify the property owner's loan so they are now paying the property's current appraised price and not the previous loan's value.
He cited one of MFG Capital Group's case studies in Raleigh. "The owner had a total outstanding debt of $3,850,000, but the current market value of the property was only $2,643,000," Jewell said. MFG Capital Group negotiated to purchase the loan for $1,665,000. They then worked to modify the owner's debt from the original $3,850,000 to $1,850,000. This saved the owner $2 million on the principal.
"The owner then carried a nine-month bridge loan at 15 percent interest," he said. "After which time, the owner obtained a refinance loan at 70 percent LTV [loan to value] for $1,850,000 at 7.25 percent interest, a 20 year amortization with a 10-year balloon."
Another example where MFG Capital Group was able to step in and help involved a property in Birmingham, Michigan. Jewell said in that instance, the owner wasn't in default and had an excellent credit score, but while the property loan was for $1.2 million, the property was only valued at $1,050,000.
"We negotiated with the bank and purchased the loan for $700,000," said Jewell. This reduced the owner's debt to only $800,000. MFG Capital then assisted the property owner with refinancing at 80 percent LTV in only 14 days.
MFG Capital Group is able to offer underwater homeowners a fast turnaround as well. "We can negotiate with the bank normally in one to three weeks," Jewell said. Homeowners are responsible for only two expenses – the property's appraisal fee and the fee for the attorney who does the paperwork on MFG Capital Group's purchase of the loan from the bank.
Last year, according to Jewell, MFG Capital Group looked into more than 100 properties that were underwater. These residential and commercial properties comprised over $1 billion in loan submissions across the country. MFG's relationships across the country also include borrowers, brokers, CPAs, Real Estate agents, lawyers and other intermediaries who contribute to its loan origination platform.
Jewell touted MFG Capital Group's relationship with a select group of intermediaries around the country. "These relationships continue to bring prospective borrowers to MFG for several reasons: rapid decision-making and swift transaction closings; certainty of closing; privacy of our borrower's financials; flexibility allowing creative solutions within the scope of MFG underwriting criteria; and experienced professional management to analyze, structure and close transactions," he explained.
For more information on MFG Capital Group, call their 24-hour recorded message at (888) 287-9191 or visit their Greensboro office at 1501 E Bessemer Ave.