Community Investment Corporation: Revolving Loan Pool

CIC operates as a revolving loan pool. We use standard and innovative lending products that allow developers to borrow money from the pool to rehab multifamily apartment buildings into quality affordable housing.

CIC serves as the intermediary between our investors and borrowers. Our revolving loan program has four phases:

Investors pledge funds
CIC issues mortgages
CIC sells notes to investors
Investors share in revenue stream

Investors pledge funds
Banks and other institutions join CIC’s revolving loan pool as investors. Each new or renewing investor signs a Pledge Agreement to commit to purchasing shares of future CIC note sales up to a specific cumulative dollar amount.

CIC issues mortgages
CIC issues mortgages to developers using a letter of credit secured by the Pledge Agreements from investors. CIC monitors the construction and project rent-up to ensure performance.

CIC sells notes to investors
Once a project has stabilized after rent-up, the loan is sold to investors. CIC bundles these mortgages into a single "note" and informs investors of a note sale.

Each investor is obligated by the Note Purchase Agreement to purchase its share of the note. An investor’s share of each note sale is proportional to its percentage share of the total outstanding pledge amounts.

Investor percentages are recalculated periodically as new investors join the pool or as current investors increase their pledges. Note sales occur on a regular basis, usually every few months. Each investor typically designates one member of its staff to be CIC’s "Note Sale Contact."

Investors share in revenue stream
As borrowers repay their loans, CIC passes through to the investors their percentage shares of all the interest and principal received from borrowers, less a servicing fee. These are monthly payments to investors.

Because CIC is a revolving loan pool, payoffs of mortgages are recycled back into the investor’s outstanding pledge amount.