Fast. Easier. Hassle-Free. Did I mention Super-Fast?!

These appropriate adjectives are common selling points inside private money lending. This industry’s main value proposition prompted my joining CMA. Private money is faster, and can be easier and produce less hassle than traditional loans and can full of risk.

This all CMA members know all too well. In this article, I’m going to share some little known facts about a tiny piece of the process.
Regardless of the(your) specific years of experience lending, think about the tools you use, processes in place and any unique beliefs or experiences needed to operate a loan business. Now, imagine operating with a slightly different knowledge base. Imagine a CMA lender could get more of what they want. Faster. Less cost. Less risk. More knowledge.

When I lobbied my team on the merits of a CMA membership, education was one of the top 2 benefits. It worked! In repayment of my private money education received from several CMA members, I’m now sharing some factoids about my industry with all of CMA.

It’s Called; “Dan’s did you know facts”. It’s generally about environmental due diligence & collateral risk management.

First, let’s rewind. I believe it’s human nature for people to want to be smarter. Also, humans want other humans to be smarter too(generally speaking). Face it, humans love showing off their new smarts. Think of a new joke or factoid you couldn’t wait to share. In that vein, here are several points of knowledge that you can start sharing in order to help someone else.

This is the intention here. You, the reader, put “Did you know” on the front of each factoid. Then you say to your clients, “did you know…(insert my factoid here)?” Then ideally your client says, “Wow, I didn’t know that. Thanks!”

Here goes:
4 bullet points allowing CMA lenders to make better decisions: “Did you know…”

  • 1) “There’s a website with free info on most of the environmental data for California? It’s a great starting point for data but even though it doesn’t contain everything related to environmental risks.”
  • a. Using this website: https://geotracker.waterboards.ca.gov/
  • i. Go there & type in a business address.
  • 1. Look for squares:
  • a. Red squares(case closed) are not always safe
  • b. Green squares(open case) are not always dangerous to deal
  • c. No squares at all, does not mean ZERO risk
  • 2) “Underground Storage Tanks(UST), can vary greatly in risk? Actually, the tank size, its contents, and the number of years in the ground are what need to be examined.
  • a. For Example:
  • i. A 250g grease trap is not same as an above ground dry cleaning tank
  • ii. A 10,000g new UST is not same as 40 year old 4,000 g UST.
  • iii. 50 g hydraulic lift UST is not same as PERC tank abandoned 20 years ago
  • 3) “The size of a loan DOES NOT correlate to the environmental risk potential? Seriously, even small loans can be huge cleanup issues just like big loans.”
  • a. Math of risk:
  • i. $150k CRE loan on $300k valuation vs $1.5M loan on $3m value
  • 1. Add in cost of testing and pulling a tank of $150k loan and $1.5M loans
  • a. Which has more LTV cushion?
  • 4) “That even though the Phase 1 is a Gold Standard for environmental, on a refi, it does not add protections to a borrower or the lender? In fact, the added time and cost of a phase 1 can hurt a deal more than help it.
  • a. Other environmental report types(ETS & RSRA) can support the “fast & easy” slogan better.

There you have it. Go forth and be a touch smarter in the world. Environmental issues are rare but usually are complex. Remediation costs are no joke. The cost to fix a dirty property can be 15X the value of a property. The data is out there to help lenders & borrowers make good decisions and avoid disasters.
Most of you know these facts and risks. Now go and teach your clients. Maybe they too will say thank you for that new education.

Thank you.

Dan Rogers
eScreenLogic
Director of Sales