Three Documents that Protect FPCM Clients

First Financial Tax Group pic

First Financial Tax Group
Image: fftaxgroup.us

Before becoming the principal of First Financial Tax Group, Barry M. Kornfeld earned a bachelor’s degree in finance and accounting at American University Washington, DC. As a financial advisor through his firm, Barry Kornfeld offers first position commercial mortgages, or FPCMs, to clients seeking alternative sources of fixed income.

FPCMs are safer alternative income sources that yield stable returns of at least 6 percent annually, with interest payments made monthly. Maturities are generally about 1-year. To protect FPCM clients, the transaction will utilize three (3) main documents:

Promissory note – This is a contractual promise between the specialty mortgage company, and the FPCM holder, stating the terms of which the mortgage company will repay the first-position lien holders according to the terms set in the FPCM agreement.

Loan agreement – The loan agreement stipulates the security interest in the collateral that serves in favor of the first-lien position holder.

Assignment and collateral assignment – In these documents, the specialty mortgage firm discloses all of its interests, participation, title, and rights as a second-lien holder.

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