Precept Corp. uses online auction to close loans. (Technology Update).

Precept Corporation announced the successful closing of two commercial real estate mortgage loans worth $9 million that were originated "from scratch" on its online auction platform.

The auctions successfully resulted in fixed rate permanent financing for two individual properties in South Carolina and Wisconsin. The closings follow Precept's announcement earlier this year of a "Guaranteed Loan Program."

"We are putting our money where our mouth is: we will deliver a loan if we say we can," says Kathleen F. Corton, executive managing director of Precept and director of lender relations.

Precept is the Internet marketplace for borrowers, lenders and intermediaries. Precept brings new order and efficiency to the commercial loan market by performing underwriting and due diligence upfront, followed by an electronic auction to lenders on a pre-packaged, ready to finance property.

In the first of these two Precept online auction transactions, property owner Belle Station Company, L.L.C., re-financed existing construction debt, plus refinance costs, with a $6.1 million loan on Belle Station, a 67,300-SF retail-anchored shopping center in Mt. Pleasant, SC. The property is situated on a nine-acre parcel and is anchored by a Food Lion supermarket. Terms of financing were 10 years with 30-year amortization, with a spread of 215 over 10. Robert Wilson, of Capital Advisors' Charleston, SC, office, arranged the transaction on the owner's behalf.

In the second auction, owner Parkview of Caledonia, L.L.C., received a permanent fixed rate loan of $2.9 million to refinance construction for Park View, a 73-unit senior living facility located in the Milwaukee suburb of Caledonia, WI. Terms were 10-year, 30-year amortization, and an LTV of 76%. The property was a Platinum Award finalist in the 2001 Multihousing News national competition for outstanding developments. Don C. Trossman, of Cohen Financial, arranged the financing for Parkview.

Precept's Guaranteed Loan Program is framed around the company's strong confidence in its system. Precept will not charge any fees for loans put into its platform, and will also pay for all third-party reports. Borrowers do not pay any fees or expenses until they accept commitments on the loans through the Precept system. In addition, Precept will share its lender fees from committed loans on a 50/50 basis will all professional commercial mortgage brokers.

"We know the commercial mortgage brokerage community is the life-line of the business, and a key constituency in helping us promote a revolution of efficiency and transparency throughout the industry," Corton says. "We built these programs to welcome brokers' participation in delivering a better process and product to their customers."