Process Change: Borrowers Always Control Their Own Funds
In our blog post of April 13 we described how our process had been updated so that each of our clients's initial 20% funds would be held with a regulated investment bank, in the bank's primary account (which is housed at the US Federal Reserve Bank). The plan at that time was that the borrower's 20% funds would be wired to the investment bank's account. Borrowers had complete security of their money by having it held by a FINCEN regulated bank. However, it remained a fact that their funds were being held by a 3rd party.
We have now made another significant advancement to our process to offer the Borrower an even higher level of security, where THEY (the Borrower) never relinquish control of their funds.
Upon reaching the point in the loan setup process where the Borrower must position their 20% funds to begin the final compliance approval process, they are no longer required to move their money to the control of a 3rd party. At that point in the process, we (FilmCabbage) will make arrangements for the investment Bank to reach out directly to the Borrower. The bank will onboard the Borrower as a client, and set them up with THEIR OWN ACCOUNT with the investment bank. That way, when their 20% initial funds move (as required) to that bank, it will be in the Borrower's OWN ACCOUNT. The Borrower will have full access to this account online so they can see their funds and have access to them at any and all times. If the Borrower decides to withdraw from the loan process, they themselves make the arrangements with the bank to wire it back to their original account. The Borrower always has complete control.
This is a significant improvement to the "comfort level" for our borrowers, as they now deal directly with the bank and never move their money to a 3rd party. Their funds are always in their own account, and they retain complete control of them at all times. The Borrower will still be required sign a "Deposit Agreement" with FilmCabbage (where they agree to the required terms of keeping their funds undepleted and unencumbered through the appropriate length of time), but FilmCabbage will have no involvement with their funds. It will be handled only between the Borrower and the Investment Bank.
Our process remains fluid, as we are always making small changes to improve the process for both us and for our Borrowers. And now, no matter the size of the project the Borrower always has total control of their own initial funds, so there can be no question about the complete safety and security of those monies.