TDIC
Encyclopedia
A license
d trust deed investment company (TDIC) offers investment
s in collateral
-backed property
loan
s in the United States
. Unlike private individuals who are generally subject to usury
laws limiting interest rate
s on loans, TDICs can legally lend to property owners at rates determined by market demand. Because TDICs usually lend to borrowers with needs bank
s cannot accommodate (e.g., fast turnaround, multiple-use real estate
projects), market rates for trust deed investments are usually significantly higher than bank mortgage
rates.
TDICs originate, underwrite, fund and service the loans for individual and/or group investors. Trust deed investors receive regular interest payments throughout the loan term and principal is repaid when the loan matures. In the event of default, TDICs generally manage workouts and, where necessary, foreclosure
, on behalf of investors. Some TDICs have in-house real estate brokers who can re-sell REO
in the event of foreclosure. Others may also have property management
staff who can rent foreclosed properties on behalf of investors.
Licensing requirements for TDICs vary from state to state. Generally, TDIC activities are overseen by a state's governing real estate, lending or corporation authority, or some combination.
The private money loans provided by TDICs are also known as hard money loans—a reference to the hard assets that provide collateral for the loans. Hard money loans are usually short-term, bridge loans designed to meet temporary cash needs for projects that will eventually be refinanced with conventional bank loans.
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
d trust deed investment company (TDIC) offers investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
s in collateral
Collateral (finance)
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
-backed property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Unlike private individuals who are generally subject to usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
laws limiting interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s on loans, TDICs can legally lend to property owners at rates determined by market demand. Because TDICs usually lend to borrowers with needs bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s cannot accommodate (e.g., fast turnaround, multiple-use real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
projects), market rates for trust deed investments are usually significantly higher than bank mortgage
Mortgage
A mortgage is a security interest in real property held by a lender as a security for a debt, usually a loan of money. A mortgage in itself is not a debt, it is the lender's security for a debt...
rates.
TDICs originate, underwrite, fund and service the loans for individual and/or group investors. Trust deed investors receive regular interest payments throughout the loan term and principal is repaid when the loan matures. In the event of default, TDICs generally manage workouts and, where necessary, foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
, on behalf of investors. Some TDICs have in-house real estate brokers who can re-sell REO
REO
REO may refer to:*Real Estate Owned*REO Motor Car Company**Ransom E. Olds, its founder**Reo Speed-Wagon, truck*REO Speedwagon rock band**REO Speedwagon their 1971 debut album**R.E.O./T.W.O. their second album**R.E.O...
in the event of foreclosure. Others may also have property management
Property management
Property management is the operation, control of ususally on behalf of an owner, and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition...
staff who can rent foreclosed properties on behalf of investors.
Licensing requirements for TDICs vary from state to state. Generally, TDIC activities are overseen by a state's governing real estate, lending or corporation authority, or some combination.
The private money loans provided by TDICs are also known as hard money loans—a reference to the hard assets that provide collateral for the loans. Hard money loans are usually short-term, bridge loans designed to meet temporary cash needs for projects that will eventually be refinanced with conventional bank loans.
See also
- Bridge loanBridge loanA bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing.-Description:A bridge loan is interim financing for an individual or business until...
- Hard money loanHard money loanA hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued by private investors or companies...
- Non-conforming loanNon-conforming loanA non-conforming loan is a loan that fails to meet bank criteria for funding.Reasons include the loan amount is higher than the conforming loan limit , lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it. In many cases, non-conforming loans can be...
- Private money investingPrivate Money InvestingPrivate money investing is the reverse side of hard money lending, a type of financing in which a borrower receives funds based on the value of real estate owned by the borrower...