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Kapoho resident had a bad experience with SBA.
May be it is normal practice but looks like predatory landing to me.In any case,they should be more transparent that people don't waste their time.
https://m.facebook.com/groups/357455554420269?view=permalink&id=1083204031845414
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What was the experience? I have heard about this too, am interested in hearing more. Is the interest rate too high?
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Paul,I forgot to post the link and was correcting it while you were posting your reply.
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Thanks! I read the link but sorry I still don't understand the outrage.
Can anyone explain?
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"When we later carefully read all of their paperwork, we discovered that they were to be put on our insurance as a lien holder and our Kapoho insurance settlement was to be sent directly to them."
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I read the entire thing and also some other posts on how the SBA program works. I see no reason for "outrage" as the SBA program makes it clear, up front, that if you later get insurance reimbursement, that money is to go towards paying your emergency recovery loan. Otherwise, you would be profiting from the low interest rate from the SBA.
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I agree that some seem confused and were hoping to get a low interest loan and also their insurance money to rebuild their lives, but how does a borrower profit from paying interest on the SBA loan?
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I don't understand the "outrage". Isn't the loan holder supposed to be the beneficiary of an insurance payout, up to the amount of the loan?
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I thought the idea was that you get the SBA loan now, whereas you may be waiting a long time for that insurance payout.
Don't tell me all those angry people on facebook are just echoing each other with no clue of what they're talking about?!
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how does a borrower profit from paying interest on the SBA loan?
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The terms are better than market average and issued to help get you into new housing immediately (which it is apparently doing in this case) and not let you keep the proceeds of the difference between old mortgage and insurance payout.
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How does the better-than-market interest rate get you into a new house immediately? Sellers don't take into account the terms of a buyer's loan. As for pocketing the difference, they could keep their insurance payout (free from interest) or be forced to have it applied to a new loan (at low interest). Still no sign that taking out a SBA loan allows them to profit as opposed to keeping their insurance money, other than they can purchase something sooner rather than later.
