Further info on individual TIC loans

The San Francisco Business Times has an article this morning on the current situation with individual TIC loans.

Most importantly, there appears to be interest from the secondary market (other banks who buy loans that are originated elsewhere). This is going to be extremely crucial for this program to really grab hold... If the banks who are considering this now don't have a secondary market, they will be forced to hold the loans for the duration (which for Bank of Marin is ten years). Most banks will eventually sell their loans to a third-party, thereby freeing up more capital for other clients.

Says Bob Griswold, President and CEO of Bank of Marin, "There are people who are interested in making a secondary market in individualized TIC loans," adding that he's been approached by such parties. "I think we'll see a secondary market develop."

There is also further discussion of E-Loan's entry into the TIC market in the fourth quarter of this year.

There is also a previous SBT article from August 16th on this same topic.

Currently, the Bank of Marin product, although already completely sold out, has a slightly higher price than traditional loans. They have offered their loan to borrowers who needed $300,000 to $400,000 loans, at an interest rate of 7%. The loan is amortized over 30 years, but is payable in 10 years (owners would have to refinance at that time, or pay the loan in full). The rate is fixed for five years, then adjusts once for the final five years.

Compared to the current risk associated with co-borrowing as TIC buyers are forced to do, this slightly higher rate will just mean that TIC prices will stay lower than condo prices, but only slightly...