Explaining the Rights of a Senior Lien Holder

Barry Kornfeld pic

Barry Kornfeld
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A graduate of American University in Washington, DC, Barry Kornfeld is a financial advisor currently serving as the principal of First Financial Tax Group. Barry Kornfeld specializes in First Position Commercial Mortgage Notes (FCPMs), which make a lender the senior lien holder on titles of high-value commercial and retail properties.

FCPMs offer clients nearing retirement or already retired a safer income alternative. They provide a regular, 6 percent interest payment on loans that mature over the course of a year. The lender is granted the primary lien interest in the property in exchange for the money lent.

An important point of distinction is that a senior lien holder does not hold title of the property. Instead, they are granted a number of rights upon taking the position. The most important is receiving priority in the share of a sale if the property is sold. This also protects the senior lien holder in cases of foreclosure, or if the property owner defaults on payments. To reduce their clients risk, Kornfeld’s firm utilizes a specialty mortgage finance company that contractually obligates itself to make the interest and principal payments no matter what.