Since banks seldom loan 100 percent of construction costs, developers often turn to mezzanine financing to obtain necessary funds. With mezzanine debt, which of the following entities is typically pledged as collateral to the lender?
A) Land
B) Ownership shares in the development entity
C) Personal assets of the developer
D) Construction materials

Question

Quizplus · Accepted Answer

Mezzanine financing typically involves the pledge of ownership shares in the development entity rather than physical assets such as land or construction materials. This allows the lender to take ownership of the borrower's equity in the development in the event of default. Personal assets of the developer may also be pledged as additional collateral, but this varies depending on the specific terms of the mezzanine financing agreement.

Since Banks Seldom Loan 100 Percent of Construction Costs, Developers