Tenants In Common Mortgages

In the near future, online lender E-LOAN is planning to offer a “tenants in common” mortgage loan product, according to Mark Lefanowicz, CEO of the Pleasanton, Calif.-based company. Implementation of the pilot program in San Francisco is slated to begin in the next few months.

Offering advantages that commercial and personal loans don’t, tenants in common loans are designed to offer the convenience of a personal mortgage while keeping affordable housing costs within reach.

Borrowers are able to take what may have formerly been a commercial property and convert it to condominium style residences. However, unlike condominium ownership, where the individual owns the inside of his or her residence and a share of the rest, tenants in common each own a share of the entire property.

Because the cost to convert a building to tenants in common residences is lower and the procedure adds more supply to the real estate market, borrowers are left with lower mortgage balances and payments.

“We believe that tenants in common consumers stand to benefit from this product offering because rather than having to obtain a commercial or personal loan together with other tenants, they’ll have the opportunity to enjoy the flexibility and control associated with having their own mortgage on their own individual unit,” Lefanowicz said.

Lefanowicz told MortgageDaily.com in an emailed statement it’s important to note that E-LOAN rapidly sells (typically within 30 – 60 days) all of its funded mortgage loans into the secondary capital markets.

“Funded tenants in common loans would be no different in this respect,” he said. “Moreover, the risk involved in funding TIC loans vs. other mortgage loans that we currently fund should not be significantly different.”