Net worth requirement for agency/CMBS debt

I currently own a park and plan to refinance with agency/CMBS debt.
One requirement I’ve heard is you need to have net worth equal or greater than the amount borrowed.

Does it count my equity in the park I’m about to refinance ?
Most of my money tied into this park.

Appreciate all input!

No, I doubt it will count. You may not qualify.

What about mortgage? Does it count as a liability and take away my net worth calculation?

I used to be a mortgage broker so, take this for what its worth. :wink:

Mortgages count as a liability – always.
But there is an offsetting asset – the property.


CMBS debt is usually less restrictive than Agency. If you find the right lender they will lend to almost anyone. However, the terms will get worse the weaker the borrow/property. IE High LTV, No Liquidity, Tertiary Market etc. Also CMBS Deals have defeasance. Basically, a HUGE pre-payment penalty.

Agency debt is a lot harder to get. I have 2 Fannie Mae loans. The rate and terms are amazing, but the requirements and brain damage to close are excruciating. For Agency you will need a good amount of money in reserves. They like to see $1.0MM liquid and/or 10% of the loan amount. If you are looking for a $20MM loan then be prepared to have $2.0MM liquid. Also the attorney’s fees are crazy. I spent $50K in attorneys fees closing one deal. $25K for My Attorney and $25k for the lenders attorney.
Agency is non-recourse with carve outs so the insurance requirements are much higher. The upside with agency is the option to pull a supplemental (2nd mortgage) within the first 5 years.

Your equity in your park will count towards your Net Worth, but not your liquidity. However, Stock Bonds, IRA’s, 401K, Cash etc. do count towards your liquidity.

You can also look into a local Credit Union. If you loan amount is under $1.0MM you will definitely want to stay away from CMBS and Agency. They will not even do it. If you can’t find a good lender in your area then try calling your state’s MH Park owners association they should have a Vendor’s list for financing.

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That’s a good news for me. So the equity in the park I’m refinancing will actually count!

Do they calculate based on the appraisal value (when I first bought the park) minus principal value on my existing loan?