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Mezzanine financing is most often used by the borrower to seek higher leverage than would normally be achieved through a conventional loan. It is also used where the existing first mortgage has a yield maintenance prepayment penalty that effectively prevents refinancing, and that the first mortgage Lender will not allow a second mortgage. Cornerstone Commercial Mortgage arranges loans where one Lender will do both the 1 st mortgage in conjunction with the mezzanine loan. Mezzanine financing effectively allows a borrower to minimize the cash contribution or pull cash out. Mezzanine financing is usually secured in the form of a 2 nd mortgage and/or a pledge of ownership interest along with structuring an inter-creditor agreement between the 1 st mortgage holder, the borrower and the mezzanine Lender.
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