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Q: How am I secured?
A: Each loan is secured by a deed of trust (a mortgage) that is a lien on real property. The deed of trust is security for the repayment of the loan. We execute an assignment of the Beneficiary's interest in the deed of trust (the document which secures the promissory note on a particular property) to the investor and that assignment is recorded in the county in which the property is located. This perfects the investors' security interest in that property.
Q: Are these investments in 1st position on the property?
A: We do offer 2nd trust deed investments from time to time, but the great majority of our loans are in 1st lien position. You would be able to choose which loans you personally would invest in.
Q: Why would somebody pay 11%, 12% or more for a loan?
A: We specialize in making loans that traditional lending institutions will not make for a variety of reasons. Sometimes it is because the loan amount is too small for them to consider. Sometimes it is because the borrower needs to close quickly and does not have the time to jump through the hoops that a FDIC insured institution requires. Other times it is because they are self-employed and cannot provide income documentation on their tax returns. There are innumerable reasons why somebody cannot, or doesn't have the time to qualify for a bank loan. We look for these types of situations. It should be noted that individuals who cannot qualify for a bank loan can generally be regarded as higher-risk borrowers and there is an increased risk of default on the loan. For more information on what happens in these situtations, see the general offering circular and the question on "What happens if the borrower doesn't pay?"
Q: What is the level of exposure (i.e. loan to value ratio)?
A: Our weighted average loan to value (LTV) ratios on our portfolio are under 54% of the value of the property (this figure will vary per individual loan). Generally, we do not exceed 70% of the value of a piece of property. The actual percentage on a given deal will depend on a variety of factors including, but not limited to, the condition and location of the property, its' marketability, the income it generates, the borrowers' credit, the purpose of the loan, and other factors. The actual loan to value will always be disclosed in advance to the investor. The value of the property will be determined either by an independent appraisal or the county tax assessed market value.
Q: How long is the investment?
A: Our loans usually pay interest only monthly, with a balloon payment at the end of the term. Our typical loan maturity is between one and five years.
Q: What are the costs to me?
A: The borrower pays all of the loan fees and other costs associated with the loan. If we service the loan (i.e. collect the payments and pass them through to the investor), we will keep a percentage of the interest payment. A typical loan fee at Olympic Coast Investment, Inc. is ½ of 1%. Additional costs will be incurred if the borrower defaults on the loan. A complete description of those costs can be found in the general offering circular.
Q: What happens if the borrower doesn't pay?
A: A complete explanation of the rights and responsibilities of the investor and Olympic Coast Investment, Inc. as servicer is included in our servicing agreement, which we will forward to seriously interested parties. To summarize, if a borrower doesn't pay it is the investor's decision as to when to begin foreclosure. There is a specific legal process a lender has to go through in order to foreclose and take a property back. From the time a Notice of Default is filed, to the time an investor would actually own the property, can range from 4 or 5 months to 18 months or more. Much depends on what legal course of action a borrower takes.
The general and specific offering circulars include a brief discussion of the potential risks of real estate lending. Investors are urged to read the general and specific offering circulars prior to investing. For a complete discussion of the risks associated with real estate lending, please consult an attorney.
It should also be noted that, although we can never guarantee that a loan will not result in foreclosure, our general underwriting policy is to make loans that are expected to pay unless otherwise noted in specific loan disclosure documents provided to you.
Q: Do I own the entire investment or am I investing in just a portion of it?
A: Most often, we sell fractional interests in a single trust deed to multiple investors. In that case, there are significant additional requirements from the State of Washington including a detailed prospectus on the overall program and risks associated with the investment. For more information on our fractional participation, please call for a prospectus.
Q: What are the dollar amounts of the investments?
A: Loan sizes range from $50,000 to $10,000,000. The majority of our loans are between $100,000 and $500,000 with an average loan size of approximately $225,000. Please let us know the size range that is appropriate for you.
Q: Can I invest retirement money (IRA, SEP, pension funds, etc.)?
A: We have many investors who invest qualified funds in our trust deeds. It depends on the nature of the account you are considering. Please check with your investment adviser as to your ability to do this. Also, we can refer you to institutions that will accept qualified funds and allow you to self direct those funds into trust deed investments.
Standard Disclosure: Mortgage paper securities are not rated or insured against loss and may be subject to substantial risks that are further described in the General and Specific Offering Circulars. Past performance is not a guarantee of future results. Investors are urged to read the General and Specific Offering Circulars prior to investing.
Disclaimer: The information on this website is only intended to provide general information about Olympic Coast Investment, Inc. and the business it conducts. Nothing contained in this website is, nor should be considered to be, an offer to sell, or a solicitation of an offer to buy, securities. The Company offers and sells investments under the provisions of the Washington Administrative Code (460-33A-020) relating to registered offers and sales of mortgage paper securities. No offer will be made to any person except in full compliance with such provisions, including the concurrent delivery of a general offering circular, specific offering circular, and other documents required by such provisions. Additionally, the Company offers and sells securities only to persons who reside within the State of Washington, as described in Rule 147(d) promulgated under the Securities Act of 1933, and does not and will not offer to sell investments to persons who are not Washington residents.
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