The point of investing is to earn a return, but when your investments are used to help people, the rewards go beyond financial.
We recently had the opportunity to assist someone who was going through a hard time. Our borrower, we’ll call her Kathy, is a woman whose mother had been in poor health for a while. In addition, Kathy’s brother is disabled and requires assistance to handle daily life. They moved into their mother’s house so Kathy could assist both her brother and ailing mother.
The house had a reverse mortgage, which means a lender paid the mother a check each month and held the house as collateral for future repayment. Sadly, Kathy’s mother passed away, leaving the home to her daughter and son.
Kathy had a limited window to pay back the $250,000 reverse mortgage, otherwise the lender would foreclose on the house and sell it to recoup the payments they had previously made to Kathy’s mother. Due to the complexity of officially transferring the mother’s estate to her children, there was not enough time to obtain a traditional mortgage to refinance the debt.
Kathy contacted a mortgage broker for help, and he reached out to us. Enact Partners does not do loans on personal residences, and since Kathy and her brother planned to stay in the house, we could not use it as our primary collateral. However, Kathy also owned a free-and-clear apartment building in a popular San Diego neighborhood.
We visited the building and saw that it was fully occupied and in good condition. The operating history showed the property had sufficient in-place net operating income to cover the payments on the requested loan, and we estimated the appraisal would result in a very low loan-to value (LTV).
Since we felt very confident in the property, we decided to move forward.
The Fund closed a loan on the apartment building in 14 days without any out-of-pocket costs from the borrower. Kathy used the loan proceeds to pay off the reverse mortgage lender, kept her mother’s home, and maintained a roof over her and her brother’s heads. The apartment building appraisal value landed right where we expected and resulted in a 30% LTV loan, which is very conservative by any lender’s standards, especially in one of the hottest apartment markets in the country.
In elementary school, I had a teacher who was a stickler for grammar. When asked how I was doing, I would sometimes respond, “I’m doing good.” Her quick reply was always, “Superman does good, you’re doing well.” That said, doesn’t it feel nice to do well financially while also doing good?