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This Schedule is designed to help you estimate the Loan Rate and maximum allowable Advance Rate* relating to any note you wish to borrow against. Each loan in the Collateral Pool is assigned a rating from AAA to BB. (See page 2 to see how the Note Rating is calculated.) This rating determines both the Advance Rate (the percentage of the note's current balance which Lender will advance as a loan to Broker) and the Loan Rate for that particular loan. The overall Advance Rate and Loan Rate for the Line are then the weighted averages of all the loans in the Collateral Base at the end of each business day. |
Advance Rates are designed to attempt to give the Broker (1) enough cash to pay the seller of the note the entire purchase price and (2) enough cash to pay overhead expenses and/or commissions. The amount we are willing to advance on the notes may not always cover such amounts for every deal considered singly, but on average it should work for almost any given group of notes. Property types that qualify for the Collateral Pool are divided into four categories. Both the Advance Rate and Loan Rate applicable to each note are included in the following chart: |
Property Type Categories**
1 |
2 |
3 |
4 |
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| SFOO*** homes on fewer than 10 acres, and SFOO modulars or double-wide mobiles on 1-15 acres. | SFOO homes on more than 10 acres, SFOO modulars or double-wide mobiles on less than 1 acre or more than 15 acres, rental homes on 1-15 acres, 2nd homes and cottages (family use only), and SFOO townhouses. | SFOO single-wide mobiles on more 1 acre, rehabbed SFOO or rental homes, duplexes (both owner occupied and non-owner occupied). | All rental mobiles, SFOO single-wide mobiles on fewer than 1 acre, non-residential vacant land (subject to approval), vacant land fewer than 10 acres, vacant land of more than 10 acres, **soft commercial or apartments (subject to approval). | ||
Note Rating |
Maximum Loan Advance as a % of Balance Due on Note |
Loan
Rate |
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AAA |
91% | 89% | 87% | 85% | 10.50% |
AA |
85% | 84% | 83% | 80% | 11.50% |
A |
82% | 80% | 78% | 75% | 12.25% |
AB |
80% | 76% | 73% | 70% | 13.50% |
BB |
Case by Case 50% | Case by Case 50% | Case by Case 50% | Case by Case 50% | 16.00% |
*Advance Rate over $250,000 not available.
**All property classifications are subject to the sole discretion of Lender. In most cases where the appraised value is less than the "equivalent balance" (defined on the following page), the Advance Rate would be a percentage of the appraised value. Any property type that does not fall into the above categories could still be added to the collateral base on a case-by-case basis by calling FNAC-NA and getting a proposed Loan Rate and Advance Rate for that particular property.
*** SFOO stands for Single Family Owner Occupied property.
The Note Rating of each Note is determined with reference to the factors below which score the equity (chart 1), credit rating (chart 2), seasoning (chart 3), and the payment record (chart 4) of each Note on a scale from 1-5 (with 1 being the best score and 5 being the worst). These scores are then weighted to arrive at a final Note Rating (chart 5). For instance, a note with 22% equity, a credit report on the payor of 660, 13 months of seasoning, and an excellent payment record on the note would get a 1.3 weighted score or AAA rating (2*30% + 1*40% + 1*20% + 1*10% = 1.3). If this note were secured by a single-wide mobile home on three acres (Property Type 3 on page 1) that appraised at the original sales price, then it would qualify for an Advance Rate of 87% of that Note's balance due and a Loan Rate of 10.5%. |
The definition of equity used in chart 1 allows Brokers to take advantage of updated appraised values and partial purchases. Equity is calculated using the balance due on the note as a percentage of the lower of the sales price or appraised value. However, if the note has one year of seasoning and the property's value is rising, then equity is calculated using the average of the sales price and appraised value (as determined by an independent appraiser). In the case of a partial, the balance due is reduced to the note's "equivalent balance" for the purposes of calculating equity. This has the effect of showing increased equity since a partial purchase results in the Broker having a lower investment-to-value. (A partial's "equivalent balance" is the calculated present value of a note using its contractual payment due, contractual interest rate, and the number of payments purchased.) |
| 1. Equity Factor (30%) | 2. Credit Rating Factor (40%) | ||||||||||||||||||||||||||||||||||||||||||||||
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| 3. Seasoning Factor (20%) | 4. Payment Record Factor (10%) | ||||||||||||||||||||||||||||||||||||||||||||||
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5. Final Note Rating |
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Final Note Ratings are dynamic and can change on a daily basis with increased seasoning, increased equity, increased (or decreased) number of days past due, etc. The Credit Rating Factor, however, is determined at the time of purchase and is not re-run at any point during the loan, except at Borrower's expense with a written request.
*Emperica® is a credit system developed by Trans Union.®
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