The Power of Assumable Loans

Antonio Hachem is a VP and a loan officer at PSRS.

LOS ANGELES—Life companies have become increasingly popular in the last year, and the slowdown in CMBS has only exacerbated the life company demand. In fact, most life companies are already fully committed for the year—and it is July. While there are many advantages to going with a life company—and many reasons your deal might be a better fit for another lending source—Antonio Hachem, VP and a loan officer at PSRS, says that the assumability of life company loans is among the top benefits of the lender.

“Life companies win business because most of our loans are assumable by the next guy,” Hachem tells GlobeSt.com. “That gives the borrower more options—the option of keeping the asset or, if they decide to sell it, they aren’t locked into the loan. That also increases the value of the property also, because when cap rates and rates go up, these loans assumable and rates are fixed. When rates go up and you have a loan that is assumable at 4% on ten-year money, we are at a 180 spread or a 200 spread over the ten-year, so we are talking 3.75% money for 20 years. That is incredible.”