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.
Barry M. Kornfeld is a graduate of American University, where he obtained his bachelor’s degree in finance and accounting. Today, Barry Kornfeld puts his education to use as a financial advisor and principal at First Financial Tax Group, a firm that assists pre and post-retirees in alternative income & growth strategies.
One of the more common financial concerns that the country’s pre-retirement population faces is understanding how Social Security is calculated and identifying the best time to file for it. The amount that an individual receives in Social Security benefits is calculated using several variables. The first variable is the total of the highest earnings that an individual collected over the course of 35 working years, which is then altered to reflect the current economy’s wage growth. That number is then averaged and divided by the number of months worked within 35 years before it becomes an individual’s Average Indexed Monthly Earnings (AIME). The formula is then applied to the AIME to determine the individual’s payable benefits at full retirement age.
Along with total earnings, the time that an individual files for Social Security affects the amount that he or she receives each month. Making a claim before reaching the full retirement age of 66 or 67 can significantly reduce a benefit amount, while waiting to retire until later can increase the size of the check one receives by around eight percent each year until the age of 70.
Financial advisor Barry M. Kornfeld is co-founder of First Financial Tax Group (FFTG), a tax and income planning firm based in Florida. Barry Kornfeld’s group offers clients a safer fixed income alternative through First Position Commercial Mortgage notes (FPCMs), a real estate collateralized bridge loan.
FPCMs have first lien status on the commercial property securing the loan, thus the lender has a greater measure using the hard asset value backing the loan. Also, the specialty mortgage company that Kornfeld’s firm partners with, is considered the industry leader, and they take a second position, in every transaction, that is subordinate to all FPCMs. In other words, they have their own skin in the game, but they cannot get their funds (skin) out, until all of the FPCM funds have been returned, with interest.
In fact, the firm the originates the FPCMs will, in fact, contractually obligate itself to make payments to all FPCMs lenders, even if the underlying property borrowers defaults, and doesn’t pay them. They will do this because the high-value real estate supports the loans, and because it protects their second interest. What this means to FPCM clients is a more secure, and safer experience, from start to finish.
Barry Kornfeld offers fixed income alternatives to clients seeking safer means of generating additional income. As a financial advisor, Barry Kornfeld focuses on First Position Commercial Mortgage Notes, or FPCMs. These notes are a type of commercial mortgage loan that is secured by tangible assets, and generally has a advantageous annual percentage yield.
Clients approach financial advisors who handle FPCMs to lend their money to firms that specialize in the short-term notes. These firms, together with third-party companies, identify commercial property owners qualified for these bridge loans. FPCMs are different from other fixed income alternatives in several key ways. Here are some of their advantages:
1. High yield over a short term – The lender’s money is locked in for only one year at a time, but he or she will still enjoy at least a 6% annual, fixed percentage yield, that is paid out monthly.
2. Security – FPCM firms structure the security of notes by ensuring that lenders have first-lien position and using the property’s equity as collateral. The value of the property is always more than the value of the loan.
3. Monthly interest payments – FPCM notes offer lenders monthly interest payments, regardless of the underlying commercial property owner’s borrower’s ability to meet payment obligations. The FPCM’s originator is contractually obligated to pay both interest and principal.