First Position Commercial Mortgage FAQ

Barry Kornfeld pic

Barry Kornfeld

The co-owner of First Financial Tax Group, financial advisor Barry M. Kornfeld is an alumnus of American University in Washington, D.C. In his professional life, Barry Kornfeld focuses on assisting his clients plan for retirement and is experienced in facilitating first position commercial mortgage notes (FPCMs).

Listed below are three frequently-asked questions about FPCMs.

1. What does “first position” mean?
When a client chooses an FPCM, he or she is taking out a third-party loan backed by a piece of commercial real estate property to accrue interest on a monthly basis. The first position refers to the fact that the person who is issued the FPCM retains priority over any other claimants or liens that could befall the property if it should default. Mr. Kornfeld and his team further insulate their clients from this event by using an industry leading specialty mortgage company that contractually obligates itself to make payments to the FPCM 1-year note holder, even in the event of borrower distress. They will do this to protect their own 2nd interest, which is subordinate to our own 1st position status.

2. What kind of properties are used in a first position commercial mortgage?
The real estate involved in an FPCM can be one of many different types of commercial properties, including retail buildings, mixed-use developments, offices, or even apartment complexes. Commercial property assets are generally recognized as more stable forms of lender collateral.

3. What is the fixed rate for an FPCM?
First position commercial mortgage rates typically start at 6 percent, and can escalate from there, depending on the level of one’s commitment. FPCM clients enjoy monthly interest payments over the course of a one-year loan term, with a full return of principal paid also at maturity.


What Is a First Position Commercial Mortgage?

Barry Kornfeld pic

Barry Kornfeld

Barry M. Kornfeld is a financial advisor and co-owner of First Financial Tax Group in Boca Raton, Florida. In this position, Barry Kornfeld focuses on assisting clients in building retirement funds through first position commercial mortgages (FPCMs), which differ from other retirement strategies in several ways.

A FPCM is a secured 12-month loan that presents clients with a retirement alternative considered to be safer than many other options. This is because the mortgages that back this retirement strategy are commercial in nature, leading to greater market stability and a higher yield on returns. The properties involved in an FPCM can be one of a wide variety of real estate options, including mixed-use properties, office buildings, or other high quality commercial real estate assets.

An FPCM pays out monthly interest to its holder, at a fixed rate of 6 percent per annum. Over the course of one year, clients with FPCM notes earn income on a monthly basis and receive a full return of principal once the FCPM loan term has reached it’s maturity.

The Reliability and Yield Advantages of FPCM Notes

stocks and bonds

stocks and bonds


Respected Florida financial advisor Barry M. Kornfeld leads First Financial Tax Group in Boca Raton. He offers clients a full range of retirement advice and income planning services. At the core of Barry Kornfeld’s offerings are first position commercial mortgage notes, or FPCMs, which are designed as fixed income alternatives that offer a safer pathway to monthly income.

Also known as secured bridge loans, FPCMs provide a reliable route toward predictable 6 percent returns over a one-year period, with interest paid on a monthly basis. Secured through insured property that acts as collateral, FPCMs are not subject to the fluctuations experienced with portfolio strategies such as stocks and bonds.

This type of loan is particularly valued for its combination of principal stability, high yields and short duration. This can free up funds for discretionary use once the one-year term has ended. Because the commercial mortgages have hard assets at their foundation, they provide lenders with peace of mind. Should a default occur, the property will simply be foreclosed on and the funds used in securing the loan recouped by the commercial lending firm that sponsors the transactions. Importantly, monthly payments and full principal redemption are contractual obligations of the commercial lending firm that Kornfeld uses for these transactions, even if the underlying property owner defaults. Importantly, the commercial lending firm that Kornfeld uses for these transactions, will have a second lien position in every FPCM that is offered, which is subordinate to all first lien positions. So, they can’t get their money out, until all FPCM clients get theirs out first.

The Basics of Bridge Loans

Bridge Loans pic

Bridge Loans

At First Financial Tax Group, financial advisor Barry M. Kornfeld works to assist clients in the Boca Raton area with safer financial alternatives such as the purchase of first position commercial mortgage notes. An FPCM note is a short-term bridge loan that is secured by commercial real property. The safety factor lies in the fact that the property is worth considerably more than the bridge loan at time of closing. Barry Kornfeld and his team work extensively with a customer base that includes pre & post-retirement individuals who are seeking secure income-generating strategies. In fact, in today’s environment, their clients enjoy FPCM yield’s of 6% APY or better, with interest that is paid out monthly.

The term “bridge loan” refers to a loan issued over the short term, typically only 1-year at a time. Bridge loans typically cost the borrower a higher interest rate and often come with higher closing costs. It serves as a “bridge” to more permanent, long-term financing. The borrower typically uses the funds in the bridge loan as a stop-gap until he or she is able to obtain long-term credit from another source, like a traditional bank or the public markets, or even a REIT. In one example, a bridge loan might cover a situation in which an entrepreneur needs working capital until a major round of funding comes through.

Bridge loans are also called “gap loans” or “swing loans.” They are very common in the real estate sector, and they can also help a borrower to purchase or renovate an existing property or business and use the resulting new income stream to get on a better financial footing.