Due to the nationwide credit crisis and subsequent drop in real estate values, many lenders have foreclosed on properties with delinquent borrowers and are now property owners. In some cases, these new property owners may be unprepared to pay for the extent of the expenses associated with property ownership. As a result, these new owners face losing their properties due to failure to maintain carrying costs such as property taxes and insurance.

CM Capital Services launched the Super Collateralized 1st Trust Deed Program (SC1) to answer this need created by the current marketplace. This program offers Investors the opportunity to participate in First Trust Deed investments with exceptionally low loan-to-value ratios (LTVs). The proceeds from these new senior First Trust Deeds will allow the existing property owners to cover most carrying costs associated with property ownership for up to two years. Monthly interest payments will be made from an interest reserve account built into the loan at annual rates ranging from 9% to 9.25%.

Loan amounts will represent approximately 10% to 15% of the outstanding principal balances on the original defaulted loans. Original loans, funded between 2005 and 2008, were underwritten with 60% to 75% LTVs based on then-current appraisals. These new loans’ LTVs would range from an estimated 5% to 15% based on those original appraisals, which do not reflect current values. These properties are located primarily in the southwestern United States and vary in zoning type.