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Commercial Mortgage Bridge Loans

By Terry Savage on January 27, 2016 | Chicken Money

Commercial Mortgage Bridge Loans came to my attention on Steve Cochran’s show.
I am 74, very recently widowed, and nervous about my 401k account losing a chunk of its value in the last few weeks. That investment account and social security are my sole source of income. I wish I could tell you in broad terms how my money is invested – I forget – but I know that it is very mixed in order to protect as well as get some growth.
When the market dived in 2008, we lost like everyone, but we had faith that we could recover by waiting, and we did. Now, I’m not sure I can afford to wait. My health is excellent, I expect to be around for another ten years or so.
I asked my Chase investment manager if he knew anything about Commercial Mortgage Bridge Loans, and he didn’t. (Which didn’t surprise me). I asked him to look into it, but I’m not convinced that he will be able to do that with an open mind.
Do you have any knowledge of or experience with these loan-investments?
Is that red flag, “guaranteed 6% growth in a year,” too good to be true?

Terry Says:  I recently posted an answer to this same question, and you’ll find it under “chicken money” where I will also post this answer.  Commercial mortgage “bridge” loans are hugely risky!  And you don’t get paid enough to take this risk!  And it is definitely NOT for chicken money.  These are pools of mortgages made to commercial borrowers who cant get such cheap financing, (if they can get any financing) from traditional lenders like banks.  So the loans are packaged in pools — supposedly “spreading” the risk — but only spreading it among a bunch of risky borrowers!  They say the loans are “secured” by the underlying commercial property.  Try getting your money back in an economic downturn when it’s tough to sell real estate.  It could take a long time, and the proceeds certainly won’t cover the amount of the loan balance in tough times!   The only people getting rich on these deals are the “packagers’ who collect fees, and a piece of the yield.  Don’t do it!

Leave your money in the bank.  I know you don’t earn any interest there — but at least you won’t risk the principal!



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