M id A tlantic Real Estate Journal — Financial — December 2024 — 7A
www.marej.com
F inancial By Marcia Kaufman, Bayport Funding Maturity Issues: What are the solutions for performing borrowers?
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to buy time in the event of a delay. You don’t need loans for another year; you need just a couple of months to get to the finish line. This makes refinancing a great option if you’re a borrower who has lim- ited or no flexibility with your current lender, if you’re in the process of transitioning a fix- and-flip and are not yet ready for permanent financing, or if you need more time on a multifamily project to lease out the apartments prior to refinancing a permanent loan. If you’re an experienced borrower with a strong track
record in a major U.S. resi- dential market like the New York tri-state area, Florida, and Texas, you can – and should — consider working with a residential transition lender that specializes in refi - nancing. A lot of lenders don’t have the flexibility to move from one fund to another, so firms that have both the capa - bility and the experience are incredibly important to have in your corner. Time is money, and refi- nancing takes less time than starting from scratch because there’s no buyer/seller dynam-
ic to negotiate. The transaction is between you and yourself, so you’re not waiting for other parties. This means you’re in much better control of your time and can get through the application process faster. Notably, refinancing is not as expensive as a new loan. Many of the costs associated with short-term bridge loans aren’t incurred again in the refinancing process. For ex - ample, title insurance is avail- able at a reissue rate, which is a discount from the premium, in states like New York and New Jersey.
All that being said, now is the time to ensure a smooth transition for when your loan matures. The end of the year is one of the hardest times to get your refinancing applica - tions done. Business generally slows down in December as people take off for the winter holidays. Companies may be closed on days that aren’t fed- eral holidays, like Christmas Eve or New Year’s Eve. It’s important to be realistic about these circumstances as you prepare your application. The refinancing experts at continued on page 23A
ultifamily and fix and flip property owners know the
pressure — there are five weeks left on your bridge loan, but there’s six months’ worth of work that still needs to
Marcia Kaufman
be done. It’s quite understand- able: these kinds of projects now take much longer to com- plete than they used to, wheth- er due to supply chain issues, the size of the project, permit holdups, or any number of surprises that unfold during a remodeling or construction project. Simply put: The clock is ticking, and time isn’t on your side. While needing more time is standard as far as construc- tion goes, lenders are much less forgiving. Many value-add or multifamily investment projects are funded with short- term loans that come with 12- or 18-month terms. These loans may allow one short extension, but most don’t. Financial institutions are already hesitant to approve extensions, and those slim chances become more unlikely at year’s end, when banks begin to offload loans. They’re already constrained by their credit facility’s guidelines and have little wiggle room to work with borrowers, no matter how reasonable the request. This situation is, unfortu- nately, not uncommon. Yet, it does not, and should not, reflect poorly on qualified borrowers with solid payment histories. The project delays are stressful enough and an imminent loan maturity dead- line makes it even more diffi - cult for borrowers. It’s unfair that borrowers are at risk of defaulting, even with excellent credit and payment history, due to circumstances that are no fault of their own. When the loans are good, the projects are sound, and you as a borrower have an excellent profile, you’re not out of luck. There are refinancing options out there that provide you with breathing room and more time to plan. Refinancing options give qualified borrowers a longer runway to complete their projects. These financial prod - ucts are precisely designed
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