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<br />MORTGAGE <br /> <br />PROS: <br />1. It would be secured by an identified asset capable of determining value and <br />priority. The nature of the asset can’t change without EDA approval. <br />2. Easement enforcement. Foreclosure by Advertisement is a statutory process that <br />does not involve a court action. It would take approximately 10 months to <br />complete a Foreclose by Advertisement. A title insurance policy could be <br />obtained to insure the EDA against any losses resulting from mechanics lien <br />claims. Mechanics lien claims would be the result of any unpaid bills for labor <br />and material used in constructing the improvements. <br /> <br />CONS: <br />1. Only one asset secures performance of the note. <br />2. Still requires a personal guarantee. <br />3. The mortgage given the EDA would be a second lien. This means the EDA would <br />have to pay off the first mortgage to protect the second mortgage. <br />4. At this time the land securing the EDA mortgage has a set value. However once <br />construction starts that value will fluctuate based upon the percentage of the <br />project completed. <br />5. It is unclear why a first priority lender would not permit the EDA to have a <br />mortgagee’s subordinated position. <br />6. If the debt is in favor of the EDA being disclosed to the first priority lender. <br />7. What “skin” does the borrower have in the project? <br />59