Loan Secuity Valution Flashcards
What’s the guidance for Loan Security Valuations in the Red Book? and the UK Supplement?
- VGPA 2 of Red Book 2022
- UK VPGA 10 (commercial)
- UK VPGA 11 (Resi)
Conflicts of Interest for secured Lending?
- All involvements with the borrower have to be raised.
- 2 Years prior, but can be longer.
- Instructions should be declined if COI
VPGA 2 Examples of COIs? (4)
- Long-standing relationship with borrower
- Gets an introduction fee
- Finical interest in the holding
- Valuer is retained to act on the disposal or letting.
Additional Info in Bank reports?
- Disclose involvement with borrower in LOE.
- Methodology supported where appropriate with calculations if requested.
- Previous Transactions
- Environmental Consideration and reports
- Suitability of Loan
- Circumstances that could effect the price
-AOM
Agden Brook, Did you do anything extra when report with a Special Assumption?
Yes,
- Stated the difference in value the assumption did and why.
RICS Guidance on Contamination?
Contamination, the Environment and Sustainability, 2010 (3rd Edition)
3 Phases of Contamination?
- Review History (Desktop Based)
- Investigations with detail soil samples
- Remediation Report
What advice do you give for contamination?
- Caveat report (Special assumption)
- Refer to specialist advice
- Deduct remediation costs from Value.
Wrinehill Hall Farm, What values did you submit to the client?
- Market Value
- Market Value on the SP on a ‘no scheme world’
- Market Value on the SP of access across the strip.
Wrinehill Hall Farm, what did you consider in the depriation of the remaining farm?
- Lack of land in proportion to cattle housed, didn’t meet NVZ
- Lack of assets not being required
- Houses proximity to railway.
- No legal access to severed land.
Ravenhill, what did you include in your abnormalities?
- Services
- Landscaping
- Track Repair
- Re roofing (Checks with BS)
Whats Contingency?
An indecent expense for risk
Ravenhill, Why would a structural survey eliminate risk?
Gave more accurate to the figure needed to repair the roof.
Redhall Farm, how did you incorporate the Option agreement?
- Investigated Planning
- No immediate development as it was in greenbelt and green space.
- Assumed that the option wasn’t going to be actioned given it was near the end of the timeframe.
Standish Hall, How did you report a single figure?
- Gave an appropriate discount to the combination of all of their values.
- Cross-referenced this on a £/acre basis against other estate portfolios and arable farms that had a mixture of dwellings and investments.
What is the Loan to value ratio?
Loan amount to security
Ravenshall Farm, what else did you consider and highlight in your residual?
- Sensitivity testing (Scenario)
- Method of Sale for GDV
- Construction costs (BCIS)
Additional considerations at the LOE Phase?
- Liability Cap
How do you assess the Suitability of the Loan security?
- Does it meet the Loan Security Ratio
- SWOT analysis
- Factors considering Cash flow and liquidity
Does a loan security value rely upon regulated purpose?
No
- not regulated by third parties
Option vs Promotion agreement?
Option - develope gets given the right to apply for planning. Then can buy it at Market Value. Obligation to sell.
Promotion - both parties want best value, no obligation to sell and take it to the market after.
Red Hall Farm, What did you look for in the Option agreement?
- Trigger
- Term
- Option Fee
- Price to be paid
Red Hall Farm, what was the figures? dates? and calculation?
Option fee was = £2,500
Term was 5 years with 1 year remaining
Calculation was MV-OF.
