Our Underwriting Strategy

What is Private Money Lending?

A private money lender is company that loans money, secured by a note or deed of trust, for the purpose of funding a real estate transaction.

At Axiom Capital Resource, we coordinate the financing (lending of money) for the purchase or refinance of real estate to its experienced real estate professionals (borrowers).

These borrowers find properties, purchase them at a discount, improve these properties where needed, and then sell them at a profit. Axiom underwrites each and every loan to a set of standards designed to ensure there is sufficient equity in the property to protect the loan and our investor’s capital.

Key Underwriting Points – Risk Mitigation

A. Our approvals are based on Four C’s of underwriting.

  1. Character – Character refers to the borrowers’ credit history and score (and in some cases, a background check). Credit is always a determining factor of approval in the private money space; however, it can have an impact on the terms of each loan.
  2. Capital – Capital refers to the borrowers’ assets. We review bank statements for adequate funds to cover the down payment, closing costs and reserves.
  3. Capacity – Capacity measures a borrower’s financial position and their ability to repay a loan by comparing income against recurring debts.
  4. Collateral – This is where you mitigate risk! The underlying collateral for a hard money loan is very important to your overall security and participation in the transaction. In lieu, we do significant due diligence when determining the valuation of the collateral, including a third party appraisal on ALL subject property.

B. Lending Limits. Max LTV (Loan to Value) or ARV (After-Repaired Value) is 75%. This will allow significant equity in each property; further increasing our investors’ ability to maintain their profit.

C. Hazard Insurance. Borrowers are required to maintain homeowners insurance in an amount to cover the loan and replacement cost of the improvements. You, as the lender, are always listed as the loss payee of the insurance policy.

D. Title Insurance. Each loan is covered by a full extended ALTA lenders title policy to insure that the title holder and/or owner has a valid title to the property, is in 1st lien position and protected against any other title defects. A copy of the preliminary title report will be provided for your records.

As an investor, you effectively act as a mortgage lender for a borrower – you provide all or a portion of the loan proceeds. The borrower signs a promissory note at a stated interest rate. A mortgage note or trust deed against the property, typically in first position, is recorded naming you as beneficiary, which provides collateral to secure the borrower’s obligation under the promissory note. You receive monthly payments at the agreed upon interest rate. When the borrower pays off the loan or the loan term expires, you receive payment for your principal investment and any remaining interest owed.

All investments are property specific and not pooled with other investments. Therefore, before deciding to invest in a specific deal, you will be able to review pertinent documents such as the appraisal report, title report and borrower application.

Strategic Partnership – Third Party Services

While Axiom handles the origination of the loan; we partner with a third-party Loan Servicer, to service each loan on behalf of our investors. Axiom’s Notes and Trust Deeds are funded from private sources such as individuals, entities (such as LLCs and corporations), pension funds, institutional investors and IRAs.

Advantages of using a third-party Servicer:

  1. A significant independent third party handling the money.
  2. E&O insurance, Liability Insurance, Fidelity Bond, plus state bonds.
  3. A Tier One national Rated Servicer assuring compliance in all areas for Investor/Lender safety
  4. Funds disbursed daily after clearing
  5. Servicer handles all aspects of servicing, default, foreclosures

How are my investment returns paid?

Typically you will receive a monthly payment representing your portion of the interest rate on the loan. When the borrower pays off the loan amount, you will receive payment for your principal investment amount plus any remaining interest owed.* Payments are processed by FCI and can arranged to have your payments deposited directly into your bank account.

When will I receive my principal amount back?

Typical loan terms are between 6 months to 2 years.*

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