Securities information is provided from the borrower. You may complete the Quote Form listing the names of securities, their stock symbol along with the number of shares or you may forward a copy of the client's recent monthly statement. The loan-to-value ratio and the interest rate are determined by what securities are pledged. The more liquid and actively traded the securities are the higher the loan-to-value ratio and the lower the interest rate.
A Term Sheet (Loan Commitment) is issued and if the terms are acceptable then the Pledge and Loan Agreement are forwarded for signatures.
Borrower reviews and approves the Term Sheet/Loan Commitment.
A conference call is placed with the borrower to answer any questions and to insure the borrower understands the complete loan transaction.
The Pledge Agreement and Contract are forwarded to the borrower for signatures.
Arrangements are made for the quick transfer of the securities.
Lender tracks the closing price of the shares for 3 days to obtain an average price.
The loan is then disbursed based upon the loan-to-value previously agreed upon.
Borrower makes Interest-Only quarterly payments.
Any dividends from the securities are credited to the quarterly interest-only loan payment first and any excess is returned to the borrower.
At the end of the loan term the borrower may renew the loan, possibly refinance, or pay off the loan. Upon repayment of the loan the same securities originally pledged are returned to the borrower.
The time frame for funding may be as little as 5-7 days
It's that simple!