FINANCIAL GUARANTEEPENNSYLVANIA STATE FINANCIAL GUARANTEE PROGRAM FOR COMMERCIAL AND MIXED USE REAL ESTATE MORTGAGES

Financial Guarantee

First I want to THANK all those involved in affording Guardian Advance this opportunity. It is truly an honor and a privilege to come before this lustrous group of legislators and be heard. I know you won’t be disappointed in this presentation.

So let us begin to try to make some sense of the current mortgage Mess!  We’ve all heard that every cloud has a silver lining, or that I have a “Guardian Angel “ when something terrible happens and we seem to find something positive in a crisis situation.

I know that Pennsylvania has found an “Angel “ in the Guardian Advance program. The Financial Guarantee Program for commercial/mixed use Real Estate Loans.

The program is an economic stimulus and adds stability to the business climate for business’s seeking to establish a new or to expand there existing company by purchasing Real Estate within the Great State of Pennsylvania!

Financial Guarantee

We are proposing this Financial Guarantee program to do just that!

By Targeting Commercial / Mixed-Use Real Estate! Please take a moment to note—

Q:---Why Pennsylvania?

The Author and Copyright holder is a Native Pennsylvanian both born and raised in Allentown Pa.

Therefore, the opportunity for Pennsylvania to be the kickoff state (seems only natural ) in this soon to be nationally recognized program.

This Financial Guarantee Program subscribes to the theory that simplicity and ease of use for all those who come in contact with the program.

Financial Guarantee

  The Borrower does not need down payment money –They simply purchase - a Down Payment Financial Guarantee , at about 3% of the total purchase price of the property.

    The Lender or Mortgage Company makes no change in their current lending practices---once the guarantee is submitted and accepted the lender commits to a 100% of the property financing.

The Lender then establishes the repayment of all principal and interest on the loan for a 100% funding.

 The Financial Guarantee …is the down payment. The only time the guarantee is triggered or used ,is

in the case of any default. Should the loan have been successful and paid down ,below the original guarantee amount of the down payment, there is no recourse against the financial guarantee.

Financial Guarantee

It should be noted at this point, according to the Fitch report ( banking industry “watch dog” reporting service) less then 1% of theses type loans default on a national average.

  The stimulus is created, when the borrower does not strain precious cash reserve ,in acquiring property, this will allow the “qualified Borrower”, that has proven or has risen to an acceptable level with a lender to get a commitment from a lender to loan the” lions share” of the money. We use the words “qualified Borrower” for good reason, this program is NOT based on the use of any adverse selection process, that would reach or allow those who are unproven or financially suspect ,to gain access to the program. Rather this program is a “Reward Program” for business and entrepreneurs who are succeeding in Pennsylvania by expanding real estate holdings state wide.

Financial Guarantee

Loan commitments from lenders on commercial and mixed use property usually have a range that can be from 50% to 80% of the funds needed to close any real estate deal. This requires the purchaser and or borrower to make a large cash outlay for a down payment to acquire the real estate. This is generally the “deal breaker” in most cases.

  The Financial Guarantee will cover the difference between bank commitment and money required to settle the property. No policy changes for the banking or lending industry in the use of this Financial Guarantee.

  Keep in mind the lender still holds the larger exposure in the loan and will suffer the greater loss in the event of a default.

       A built in safe guard against rubber stamped loans.  

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FINANCIAL GUARANTEE

CONTENTS

• Marketing • Letter of Incorporation & Copyright • Competition • Operating Procedure • Background of Principles • Underwriting Guidelines • Loan Checklist • Release of Credit • Application • Appraisal • Summary Sheet • The Bond & Agreement of Indemnity • Matrix for Lending Institutions • Fitch Ratings - loan default rates • Projections • Letters of Intent from Lending Institution

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New Century Commercial RE: Financial Guarantees for "Mixed-Use Real

Estate" Markets Dear Mortgage Administrator: Enclosed please find our proposal to introduce to

lending institutions, Financial Guarantees, for mixed use real estate.

We are committed to serving both the mortgage industry as well as the insurance industry. Our theory will bring the financial and insurance industry (financial guarantee / surety) together, and formulate a program which will stimulate the economy with a normalized line of lending in the mixed use market of the real estate industry.

I hope you will share in this vision and join us on the cutting edge of the exciting revelation in mixed use mortgages.

Sincerely, Glenn F. Miller, CEO , Copyright Holder Michael Sabler, COO Barbara Polinice, Program Administrator

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Basic Questions

1. How does the Financial Guarantee Program work? 2. What is the purpose of the Primary

(Underwriting) Insurer? 3. What benefit does Primary (Underwriting)

receive? 4. What benefit does Copyright Holder receive? 5. What benefit does Secondary (Re-Insurer)

receive ? 6. What benefit does Lending Institute receive? 7. What benefit does Borrowers (Mortgagee)

receive ?

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ANSWERS

1. To define the program , it is a down payment assurance policy that is acceptable and recognizable to lending institutions that are making a commitment to underwrite

a mortgage (for commercial /mixed use property). The Lender uses their own lending practices to

underwrite the loans based on existing LTV (loan to value) percentages.

General practice range for lenders is a COMMITMENT of (between 60 to 80 percent of the LTV).

This program allows the borrower (if required to pay difference of committed percentage down payment between 20 to 40 percent. ie. Equity to meet lending requirements).

Our program will provide a policy that covers (equity) down

payment for the borrower.

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The lending institutions underwrites the loan then uses our program as an “overlay” to provide the insurance of a down payment.

A premium is paid for this "policy or bond", which "guarantees“ the down payment only.

Additionally, the policy provides a "safe guard "in writing this premium while the guarantee/policy bond only provides assurance of the down payment.

The major lending risk, if a default occurs ,lies with the

originating lender. Automatically becoming a "safe guard" against

"Rubber Stamp Loans".

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2. Primary Insurer (policy generator) produces a written

policy/bond guaranteeing down payment for a premium by doing so, assumes the risk of the required difference between the lender commitment and the LTV.

The result is 100 percent of loan needed for 10 percent of the premium.

3. Primary Insurer policy producer or guarantee bond in

exchange for policy or bond ,the insurer will receive a

percentage of the premium. An escrow pool or reserve will be generated out of each premium paid to cover potential default.

Using the theory, of the larger numbers apply and industry actuarial, primary insurer assumes a zero risk exposure for premium participation.

FINANCIAL GUARANTEE

4. Copyright Holder, will participate on a percentage basis of all premiums written (suggested percentage -40 percent of the premium).

5. The secondary Re-Insurer or Guarantor will receive a 40 percent premium for a 100 percent financial default risk.

The above figures and percentages are negotiable.

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6. Lending Institutions do not participate in any premium generated . They will have the ability to receive payment on a 100 percent of the LTV.

Generally, mortgage properties of commercial mixed use have a 60 to 80 percent loan commitment from lender, as the norm. The policy /bond , financial guarantee permits lenders to collect a 100 percent of the loan with only a 60 to 80 percent risk

FINANCIAL GUARANTEE

7. The largest benefactor is the borrower / investor , they will have the ability to borrow on the full LTV of the purchase / mortgage by purchasing a financial guarantee to cover the down payment.

The cost of this benefit is approximately 3 percent of the

purchase price plus closing costs. This assures lenders of a down payment on a mortgage.

NOTE: Additional benefit , the borrower does not drain

cash from portfolio, allowing the needed working capital to continue normal business functions, without draining their financial recourses.

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Marketing Upon surety approval the copyright holder and or its

agency, have a random marketing plan to be implemented through current lending networks. A random introduction to the

program has been implemented with results showing nearly 100 percent of the lenders responding positively for additional information concerning this program.

The respondents will be referred to a website giving summary

and examples of use. The website will also contain MGA contact information and support document request

information. Support documents will be sent electronically and can be

printed from the website to eliminate shipping expenses as well as printing expenses.

Additional marketing has been done through lending networks.

All parties polled upon presentation and full explanation show

Eagerness in the release of our "down payment guarantee"

program.

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Competition

Although we see no true competition for this program, there is always the potential piracy or modifications.

Traditional avenues for lending whether conventional, SBA, or private lending are complicated and confusing.

The primary purpose of the Guardian Advance ,Financial Guarantee Program is to simplify lending, which will allow all lenders (with current lending policy changes) particitipating to compete for borrowers business on a level plane.

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Operating Procedures

This will be determined by the surety and the Managing General Agent.

(Recommended -Fleetwood Agency)

Financial Guarantee

In conclusion, again we Thank all those who had a hand or showed interest in this presentation. Most importantly, what you have just heard places NO Extraordinary Financial burdens on any State funding agency. We are seeking a $5million Grant to perfect this program for Pennsylvania. This will stimulate billions of dollars in real estate transactions state wide. Having an unprecedented effect on the economic well being for the state of Pennsylvania. Including but not limited to property, school taxes, mortgage financing, appraisers, title companies, construction inspections, municipalities fees, permits and legal fees. With a minimal , almost non existent default rate. The Mortgage Industry is prepared for this program and waiting to begin. Let’s make it happen together. Please review all included documentation and suggested samples in your handouts. Thank you for time and consideration!

FINANCIAL GUARANTEE