Frequently Ask Question
Frequently Asked Questions
Below are several questions to help both current and potential lenders better understand our company and the private lending process. It is a priority for CapSource to insure that each person we work with feel confident in their ability to fully understand any potential problems and benefits of private lending. We hope the information contained below will assist you with making informed decisions in order to take hold of financial opportunities that fit your individual needs and expectations.
CapSource Inc. is a privately held loan origination and servicing company located in Las Vegas, NV. Established in 1997, CapSource Inc. has successfully funded and serviced private loans throughout the Southwestern United States including Nevada, Arizona, California, Utah and Colorado. Transactions originated by Capsource provide investors with a unique blend of strong yield monthly income and the safety of collateralized loans.
We take pride in the financial education we are able to share with current and potential clients and are excited to play a unique role in this very opportunity filled real estate market. By using traditional concepts with an innovative, resourceful,and diligent approach to our business, we bring together investors and borrowers servicing a niche marketplace whereby time sensitive special needs financing is met with alternative investment opportunities for premium risk adjusted returns.
CapSource Inc. is licensed by the State of Nevada Division of Mortgage Lending as a private lending and loan servicing company.
A Trust Deed Loan usually consists of a Promissory Note secured by a Deed of Trust recorded on real property. The Borrower executes the Note payable to the Lender and promises to pay the Lender a certain interest rate on the loaned money, plus repay the principal amount within a specified time frame. If the borrower defaults on the payment of the debt, the trustee is empowered by the deed to sell the property and pay the lender the proceeds to satisfy the debt.
When a borrower signs a promissory note, he is agreeing to pay the lender a specific amount of money according to certain conditions. In order for the lender to protect his interests, he will also require that the borrower sign a security instrument in favor of the lender. This may be in the form of a mortgage or a deed of trust. Whichever document is used, the purpose of both types of documents is to secure the note and offer protection to the lender by providing a means for the lender to take possession of the property in the event of default.
Depending on where the property is located, state law will determine which type of security instrument must be used.
State law will determine the method of foreclosure which must be used. Generally, the rules when using a Deed of Trust allow for a faster foreclosure time than with a judicial foreclosure required with a mortgage. Under a Deed of Trust, when the borrower defaults on the loan, the lender delivers the Deed of Trust to the trustee, who then is instructed to sell the property. The right of the trustee to sell the property is called foreclosure by power of sale. It differs in several respects from the power of a mortgage to sell mortgaged property upon default, which is called a judicial foreclosure. In short, Trust Deed states allow for a quicker and more efficient foreclosures, while foreclosures in mortgage states are more expensive and time consuming. However, in both types of jurisdictions, a default by the borrower will lead to a relatively quick resolution through that state’s respective foreclosure process.
Many state’s laws provide that you cannot lend money at an interest rate in excess of a certain statutory maximum. This is also known as a "usury limit."
In fractionalized trust deed investments, multiple investors contribute capital to fund undivided interests in the trust deed. Since a single investor does not need to put down the entire sum, this method may be preferable for those with less money to invest. This also allows for greater diversification by placing capital designated for trust deed investments into many different trust deeds representing different locations and product types, thereby diversifying many risks.
Although private loans are often more expensive than traditional bank loans, private loans have several benefits over institutional money that warrant added cost. Private loans are usually underwritten and closed in a fraction of the time it takes for a traditional bank to fund. Private lenders also offer flexible terms not available with institutional loans. Private lenders focus on the value of the collateral used to secure a loan, whereas traditional banks focus on detailed analysis of borrower’s financial statements and tax returns. In short, private lenders make much quicker decisions at lower loan to value ratios versus banks which take much longer to analyze a loan in order to justify higher loan to value ratios. For borrowers who value speed, private loans are a preferred alternative.
If an individual is interested in private lending and would like to register with CapSourceInc to receive loan opportunity information, they must first pass through a screening process. This process is designed to filter out unqualified individuals who are either not suitable or who are not capitalized properly to engage in private lending. If you are interested in registering with CapSourceInc please email us at info@CapSourcenv.com.
The minimum amount an individual may loan in a fractionalized lending opportunity istypically $25,000.
It is possible to lend privately through a self-directed IRA. The rules regarding self-directed IRA’s allow for a much broader spectrum of acceptable investments.
CapSourceInc services private loans with several different types of assets used as collateral. Asset value is more important than the type of asset. The majority of private loans originated by CapSourceInc are backed by real property such as raw land, commercial buildings, apartment complexes, single-family homes or industrial complexes. Non-traditional assets can be used as collateral for a private loan; however, the more exotic the asset, the more due diligence work and therefore time is required.
There have been instances in the past where a borrower’s collateral was strong enough to preclude full recourse. However, the majority of our loans are recourse.
Turn-around times on a loan is as little as 10 days, and as long as 60 days, depending on the complexity of the loan. However, there are many factors that can accelerate or delay loan funding including collateral type and location, title issues, and loan complexity.