Explaining First Position Commercial Mortgage Notes (FPCMs)

First Financial Tax Group pic
First Financial Tax Group
Image: fftaxgroup.us

 

 

Barry M. Kornfeld is a financial advisor and principal of First Financial Tax Group, which is based in Boca Raton, Florida. Barry Kornfeld offers an objective approach to clients, helping them develop alternative income plans to meet their financial goals. He focuses on first position commercial mortgage notes (FPCMs), which are typically a less risky endeavors than traditional bonds and stocks.

FPCMs are short-term loans, which means they offer increased flexibility for clients. They also pay a dependable monthly income that does not fluctuate based on the state of the market. This makes them one of the more dependable options for those facing or in retirement.

These higher return vehicles are secured by commercial real estate. All that lenders need to do is work with Kornfeld and his team to use a commercial mortgage to serve as the collateral for their 1-year loan. The client is secured by having the first lien position for the mortgage on that high grade commercial real estate asset. In addition, the client will be recorded on the title on this commercial real estate.

The first lien position is important because it means that the lender has priority over all other liens on the property, thereby giving the client a great deal of security. Lenders are able to use both qualified and non-qualified funds for the loans, including trusts, IRAs and 401(k)s, or can lend under their own names.

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.

What is a Lien?

 

Lien
Lien

Barry Kornfeld is a proficient and sincere financial advisor. Also a supporter of Shriners Children’s Hospital, Barry M. Kornfeld co-owns the Boca Raton-based First Financial Tax Group with his wife of 29 years. Mr. Kornfeld focuses on assisting pre- and post-retirees with retirement & income planning, and he specializes in First Position Commercial Mortgage notes (FPCMs). FPCMs pay a 6% yield over one year and are considered a safer alternative to other financial products.

FPMCs provide clients with a first mortgage position, also known as a first lien position. This assures the owner of the FPCM the first lien position, which is the most secure and highest priority. This position differs from secondary or tertiary positions which are only repaid after the first lien position.

A publicly recorded legal interest, known as a lien, is an encumbrance on an asset or property that remains in effect until the debt is repaid. First liens must be properly developed and recorded to be secure and binding. Mr. Kornfeld and his resource partners work to ensure that all FPCM holders have properly recorded liens in the county land records where the subject property is located, so that all FPCM note holders enjoy a low maintenance and smooth experience for the duration of their holding period.