Hard Money Loans (or Private Money) in Florida has always been a constant. Being a Mortgage Broker I knew or thought I knew I could always count on them to stepping up to the plate the rules and guidelines where usually very simple.
Well with the current market conditions in South Florida it was bound to effect these type of Loans. Currently, I am working on two files that would require these type of lenders. After being in the business for the amount of time that I have been I have the contacts that would fund these type of loans or so I thought.
First File
The First file is a Foreclosure Bailout with the standard below 65% LTV. Usually this is a quick and simple file. Not that I wrote usually. My first call goes to my standard Private Money investor. I was shocked to learn that they have now taken a stance and will not except any files based on Foreclosure Bailouts. OK....So this is just one of many investors. Off to my second Investor who did issue an approval but would only go as high as 45% LTV. When I questioned them they told me that is what their "Comfort Level" is on this file. This went on and on through several phone calls with several Investors. However, being in the business as long as I have and I don't believe in ever quiting I did find a new Investor who will approve this file.
Second File
This file is a purchase and the client is getting a fantastic deal on the property. When they close they will have an immediate 40% equity in their new home. Yes I know this is a fantastic deal that they are getting but like I stated through several reason they must go through a Hard Equity lender to close. Once again off to my usual contacts and again the same response no, no, no. Most of them wanted to see the client come to the table with their own money to close even though the value of the home will appraise out. Even with the Hard Equity rates the client's payment would almost be the same as their rent payment is now. (Which we can prove) However, through making several phone calls and searching out new Investors I was able to get this file approved. (Not as easy as it once was)
Now before you think I am a bottom feeder Mortgage Broker please keep in mind on the first file I am saving the person home and on the second file this person just wants to live the American Dream of home Ownership and financially can afford it.
In closing, please keep in mind that all aspects of the Lending Industry have changed including the Hard Money Lenders. Make sure that your Mortgage Professional does have the ability to bring in new investors if need be to close your file. Also, NEVER GIVE UP If you find a true Mortgage Professional they will never say die. They will work hard on your file until the end.
*Note: Before suggesting that I would have tried sub-prime or FHA please keep in mind these needed to be Hard-Equity for reason that I will not post*
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Full-Time Mortgage Broker in South FL. Palm Beach County. Specializing in Hard Money / Private Money, Foreign Nationals, Jumbo and Super Jumbo Loans. In addition I work with Today's Premiere Lenders.
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Matt- Early Bird :0) I use Hard Money myself. I love it when it's needed.
Tom Weiss
Tom, Thank you for your comment. Not sure I would say I love Hard Equity I just use them as a tool of last resort.
Matthew, it just goes to show that the mortgage situation is having a ripple effect on how money investors view all mortgages and all price ranges...
Brian, Very true. However, the good news is their is still plenty of them in business.
Matt, you've just shown to me (once again) that you're one of the mortgage brokers that has ethics and a good conscience. Not revealing *why* your clients needed a hard money loan tells me a lot about you. We don't need all the details, and your clients certainly deserve their privacy.
Kris, Thank you I do believe when working with clients some things need to remain very personal especially when dealing with these type of loans.
I guess hard Money lenders are even feeling the sub-prime crunch. I guess this is really bad news if the Hard money guys have even stopped lending.
The thing I like to remember when dealing with hard money is that there are two real reasons...
Hard Times and Fast Times and sometimes one stems from the other
for hard times I mean people just had some bad luck or bad advice but that doesn't mean they don't deserve the help. If the loan will make things worse, I'm happy to tell them that. Someone that will get in deeper trouble for buying a house sometimes just needs someone to level with them. No one likes to be the person that does this but it is the right thing to do
Fast times I mean someone that needs the money short term - like an investor - or even someone that is buying a property that a bank just won't stand behind. One hard money I did was on a gorgeous A++ New Construction Warehouse space... the combination of new construction and a few other factors keft the buyer without many options... so hard money got him in so he could do the build out that a conventional commercial lender would want.
knowing how and when to use these tools is what keeps us from abusing them... or just using them ignorantly
Matt and I talk about hard money all the time... it is a super valuable tool once a person learns to understand how to use it properly
Rick, You maybe right. I just think they are moving foward with caution..
David, I agree with your reasoning. Not every time is it because of bad credit.
Matthew- Thank you for the update on hard money lending. I need to know this info for my clients. I like to keep on top of things so I can pass on good up to date info. Can you write a post on foreclosure bail outs and the process involved, what is required, etc,.I think here right now that would benefit many homeowners about to lose their homes. Katerina
thanks for the information on mortgages and foreclosure; in the current market we all need an education in what is going on!!!
Matt - Hard Money isn't as 'Easy' as it used to be. But, you are right....I think their reaction is one of caution and doesn't mean deals like this can't be done. There is a definate money for Hard Money, a niche that can't be filled with other forms of Real Estate Loans. Glad to hear you have the 'Never Give Up' attitude in helping your clients.
Katerina, I will work on that as my next post. Thank you for the suggestion
Bill & Barbara, My pleasure Thanks for the comment
Jason, It is the only attitude to have.. Never Give Up!
Matt-recently we have been working with a buyer who had a loan approval and then the lender dropped the program. To me it presents a problem with contracts...The buyer did get his loan approval within the time frame and then poof gone. What about his escrow? Whose fault would it be? I think the mortgage industry is a mess, don't know the solution....ahhhh this too shall pass. I am wondering if we are going to see more of that? I figured it would affect the hard money lenders as well.
Ann, I know what you mean. A lot more difficult now.
Midori, I know that is why when I was issuing approvals on any program that was funky I told the Realtor ahead of time so this way we would not have any upset sellers or 3rd party people.
Did you see the changes in the FARBAR Contract...you as a loan officer can disclose buyer's loan information to sellers, seller's agents and attorney's.. Hmmmm...not sure how that is going to work.
Matt - you rock - I would never consider you a bottom feeder - you serve your clients and do not pass judgement on your clients - that is why I love reading your stuff
Midori, I don't see a problem with this as long as the person does not have their head up their a--..:-) We just would have to educated them.
Thesa, Thank you. When you do a hard equity loan people think we are bottom feeders.