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Rancher Needs a Hand

Thursday, October 19, 2017
Borrower   A family trust.
Loan   A $2,700,000 - five-year loan with interest at 12% for the first year , and 15% for the second year and 18% for the third and subsequent years.
Collateral   A first mortgage on the borrower's 13,850 acres of ranchland in Oregon
Guarantors   The trustee of the trust, who is also the beneficiary.
Purpose   The borrower was able to keep ownership of the property, which was on the point of being foreclosed by the local bank. This loan gave the borrower time to liquidate some of the land in an orderly fashion. The intention was that there should be some land left when the loan was paid off.
Exit strategy   The borrower planned to repay us from the proceeds of sale of some parcels of ranch land.
Outcome   The loan has been repaid in full. After the Borrower went into default and declared bankruptcy, a court-ordered auction process resulted in the property being sold for well in excess of our principal and interest. While the Borrower lost the property, he was able to walk away with about $1 million. Had we not made the loan the Borrower would have ended up with nothing.




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