Why Lending and Investing Fundamentals are Critical
Bad things happen when you drift away from the sound principles of lending and investing and we’ve seen a lot of that with the slow-motion fallout over the various banking and mortgage scandals that set our economy back in 2007.
Just this July, Citigroup and the Security Exchange Commission were in appeals court dealing with a 2011 ruling that fined Citigroup $265 million for its actions during the mortgage meltdown.
The fine stems from the fact that Citigroup was found to have made a lot of bad loans, realized they were bad, bundled them into “securities,” sold them to investors and then bet that the securities would fail.
Ugh. That is so far away from how business should be conducted that I hardly know where to begin. In fact, I’ll let you wrestle with that “business model.” However, I don’t want you to feel sorry for the seemingly big fine of $265 million…even for a moment. This same Citigroup was doled out $45 billion – that’s with a “B” – in Troubled Asset Relief Program (TARP) money. However, that’s a different story.
Sound principles
At Evoque Lending, we believe strongly in sticking with sound business, investing and lending principles. This approach to managing money and running a business was successful 100 years ago and it will be successful 100 years from now. Basic economic laws are just as dependable as the laws of physics, so there is safety and predictability when you stay within the boundaries of those laws.
Knowing the facts is one of the foundational principles. The poor people who got stuck with the bundled bad mortgages did not know the facts about what they were buying. This is why Evoque Lending does such a great job vetting all the details of every first trust deed that we draw up.
One of those important facts is the appraisal and we work with trustworthy appraisers who have exemplary track records for getting it right. When we have the right number for the value of the property, then we have confidence when we set our value ratios, which do not exceed 65 percent.
California real estate
When you start with that solid foundation and then add to it the ability to pay on the part of the borrower, you have a formula that delivers the kind of security that savvy investors demand. It’s also the reason why Evoque Lending has been in business for more than 15 years making loans on property throughout California, but especially on Los Angeles real estate, Orange County real estate and San Francisco area real estate.
Of course, the many years of experience we have with real estate in those parts of California also add to our knowledge of the markets and our ability to make sound loans.
We know, however, that there’s one more thing investors are looking for, and that’s a good rate of return. Right now, double digit returns are common and that puts Evoque Lending first trust deed investors in a very enviable position.
Give us a call. We can answer all your questions and help you determine if first trust deed investments are right for you.