I am attaching our revised LOI. We have accommodated much of Mr. A. requirement as he requested in his March 18 letter to us. Please tell him that we appreciated that he took the time to write us a very clear letter. Regarding the upfront points (paid at closing) we met him half way. Regarding the term of the loan we have met his request of Eighteen (18) months and removed the need for the extension options. In order to do this we had to insert conditions that are described in the LOI. For example, all 17 houses must be completed within one year. There are three conditions in all. Regarding the Deferred Fee we have reduced it from 3.75% to 2.0% (he had requested 1.25%) – however, in order to meet this reduced fee Mr. A.. and his partner must have returned all the principal to BCG within 15 months. Also, we needed to increase the interest rate to 14% although he only needs to pay current the original 9.75%. We think this financial arrangement works for the developers equally as it does for our investors. We hope this transaction will be the first of many among BCG, yourself and Mr. A.... and his partners.
Also, we added a paragraph in the LOI (bottom page four) that gives us the ability to require the borrower to make the monthly progress report in our office in San Francisco. It is our intent that we will travel to the site regularly but since this transaction is the first between our firms we think it is appropriate that we all anticipate meeting a couple times each month, at least in the beginning.
In addition, if the developer feels they need additional funding, we have address the possibility in the Reserve Account paragraph
(Page 3).
Please let me know if there are any other questions. If not please have the borrower sign the document and return it to us with the service fee. When we receive it we will plan our trip to the site and meet with you and Mr. A......
Cordially,
Charles Lee I Real Estate Finance Associate (http://www.theboydcapitalgroups.info/
