The hard money industry suffered severe setbacks during the real estate crashes of the early 1980s and early 1990s due to lenders overestimating and funding properties at well over market value.
Since that time, lower LTV rates have been the norm for hard money lenders seeking to protect themselves against the market's volatility.
Today, high interest rates are the mark of hard money loans as a way to compensate lenders for the considerable risk that they undertake.
Traditional commercial hard money loan programs are very high risk and have a higher than average default rate.
If the property owner defaults on the commercial hard money loan, they may lose the property to foreclosure. If they have exhausted bankruptcy previously, they may not be able to gain assistance through bankruptcy protection.
The property owner may have to sell the property in order to satisfy the lien from the commercial hard money lender, and to protect the remaining equity on the property.
There is also great concern about the practices of some lending companies in the industry who require upfront payments to investigate loans and refuse to lend on virtually all properties while keeping this fee.
Borrowers are advised not to work with hard money lenders who require exorbitant upfront fees prior to funding in order to reduce this risk. Those who feel they have been the victim of unfair practices should contact their state's Attorney General's office or the office of the state in which the lender operates.
Hard money lenders only look into your property, not your employment status or credit score. They look into how you can pay them back when you said you're going to on a specific time.
Since that time, lower LTV rates have been the norm for hard money lenders seeking to protect themselves against the market's volatility.
Today, high interest rates are the mark of hard money loans as a way to compensate lenders for the considerable risk that they undertake.
Traditional commercial hard money loan programs are very high risk and have a higher than average default rate.
If the property owner defaults on the commercial hard money loan, they may lose the property to foreclosure. If they have exhausted bankruptcy previously, they may not be able to gain assistance through bankruptcy protection.
The property owner may have to sell the property in order to satisfy the lien from the commercial hard money lender, and to protect the remaining equity on the property.
There is also great concern about the practices of some lending companies in the industry who require upfront payments to investigate loans and refuse to lend on virtually all properties while keeping this fee.
Borrowers are advised not to work with hard money lenders who require exorbitant upfront fees prior to funding in order to reduce this risk. Those who feel they have been the victim of unfair practices should contact their state's Attorney General's office or the office of the state in which the lender operates.
Hard money lenders only look into your property, not your employment status or credit score. They look into how you can pay them back when you said you're going to on a specific time.
from Real Estate Investing Tips - LM2 Investment Group - Blog http://ift.tt/1HnkEm6
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