Loan Purpose
Mortgage Vintage successfully funded a $120,000 business-purpose cash-out bridge loan secured by a second trust deed on a single-family residence in Santa Fe Springs, California. The mother and daughter co-borrowers utilized the loan proceeds for business-purpose working capital and equipment to support their telecommunications supply business operations. This business-purpose cash-out financing was structured as a 36-month interest-only bridge facility with three months of prepaid interest reserves, providing the borrowers with interim capital while they executed their business plan and generated additional revenues to repay the loan.
Why This Santa Fe Springs loan Stood Out
- Conservative 62.67% combined loan-to-value ratio provided substantial equity protection for the second lien position
- Located in an established Los Angeles County infill market with consistent comparable sales activity and stable neighborhood pricing trends
- Property was owner-occupied and in average condition with no significant deferred maintenance concerns identified during inspection
- Six months of guaranteed interest and three months of prepaid interest enhanced investor protection
Property Description
The collateral property was a single-family residence located in a desirable Santa Fe Springs neighborhood. The home consisted of approximately 1,244 square feet situated on a 6,020 square foot lot and was originally constructed in 1950. A recent broker price opinion estimated the property’s as-is market value at $785,000, with the property described as being in average overall condition. The investment was secured in second lien position behind an existing first mortgage with an approximate balance of $372,000, resulting in a total secured debt of approximately $492,000.
Investment Summary
This transaction was structured through the CrowdTrustDeed platform as two $60,000 fractional interests in the $120,000 total second trust deed loan. The loan carried a 13.50% annual interest rate with a 36-month term and interest-only payments. The co-borrowers maintained credit scores of 681 and 674 respectively. Investors acquired fractional beneficial interests in the trust deed and received pro-rata distributions of interest relative to their investment amounts. The loan included comprehensive investor protections including guaranteed interest periods and prepaid interest reserves collected at closing.
Financial Details
| Field | Value |
|---|---|
| Loan Amount | $120,000 |
| Interest Rate | 13.50% |
| Term | 36 Months |
| Lien Position | 2nd Trust Deed |
| Combined LTV | 62.67% |
| Property Value | $785,000 |
| Guaranteed Interest | 6 Months |
| Prepaid Interest | 3 Months |
| Minimum Investment | $60,000 |
Property Highlights
| Field | Value |
|---|---|
| Property Type | Single Family Residence |
| Location | Santa Fe Springs, California |
| Square Footage | 1,244 sq ft |
| Lot Size | 6,020 sq ft |
| Year Built | 1950 |
| Occupancy | Owner Occupied |
| Zoning | Residential Single Family |
| Market Value | $785,000 |
Frequently Asked Questions
What are the risks of investing in a second trust deed position?
Second trust deeds carry additional risk compared to first liens because they are subordinate to the primary mortgage. However, this loan’s conservative 62.67% combined loan-to-value ratio provided substantial equity protection, and the guaranteed interest periods helped mitigate some investor risks.
How does guaranteed interest protection work in trust deed investments?
The six months of guaranteed interest in this deal meant that even if the borrower defaulted early, investors would receive their expected returns for that period. Combined with three months of prepaid interest collected at closing, this structure enhanced investor protection and cash flow predictability.
Why is Santa Fe Springs considered a stable market for real estate investments?
Santa Fe Springs is an established Los Angeles County community with consistent comparable sales activity and relatively stable pricing trends. Recent comparable sales in the area ranged from the mid-$700,000s to low-$800,000s, supporting the property valuation and providing confidence in the collateral value.
Mortgage Vintage, Inc. is a California Department of Real Estate licensed hard money lender specializing in trust deed investments and bridge financing throughout California. With extensive experience in evaluating and structuring complex real estate transactions, Mortgage Vintage provides sophisticated investors access to carefully underwritten trust deed opportunities.