42 townhome units · Raleigh, NC · Meridian Land Co. LLC · First lien, $5.20M commitment · $1.50M borrower equity in
Approve at $5.20M with a rebalance structure — not the $5.45M requested.
The project is fundable; the request is thin in two places the credit state flagged — stormwater is budgeted below the benchmark range on a rock-prone site, and contingency sits under the policy band. The structure prices both: a smaller commitment, an escrowed contingency add, and a release price that steps up if the balance margin erodes. Absorption is underwritten at 1.9 units per month, below the sponsor’s 2.3.
Requested $5,450,000 · sized to 71.4% LTC against policy max 75%
Cash, verified in project account before land advance
Funded from loan · sized at underwritten absorption 1.9/mo, not sponsor 2.3
105% of pro-rata loan per lot · steps to $138,000 if balance margin < $75K
Completion guarantee + payment guarantee, both principals
Cures the 8.6% contingency flag: brings effective contingency to 12.1%
| Scenario | Assumptions | Net proceeds | Peak balance | Recovery | Verdict |
|---|---|---|---|---|---|
| Base case | 1.9 units/mo · $385K avg · budget +0% | $6.61M | $5.20M | 127% | Full recovery |
| Slow absorption | 1.3 units/mo · reserve exhausts month 15 | $6.42M | $5.20M | 119% | Full recovery |
| Price decline −10% | $346K avg · releases repriced | $5.86M | $5.20M | 112% | Full recovery |
| Cost overrun +12% | Stormwater & rock driven · rebalance required | $6.48M | $5.33M | 115% | Full recovery, cure required |
| Combined stress | −10% price · 1.3/mo · +12% cost · 9-mo workout | $5.41M | $5.33M | 104% | No principal loss · 2 mo interest shortfall |
Recovery is net sale proceeds against peak loan balance, after carry, commissions and legal in a 9-month resolution. The combined stress is the binding case: principal is covered 1.04×; the exposure is two months of interest. Full month-by-month severity is on the Recovery tab.