Hard money residential lenders are on the rise, the old game in the real estate business is making a grand resurgence on the real estate scene. With thousands of people at risk of losing their homes in today’s economy and loan scandals, the hard money lender is making a real come back. This is part due to the waning economy, part due to poor lending practices, and part due to a mortgage restructure plan that is not going so well. The combination of these factors has left a wide open playing field for the hard money residential lenders.
There are thousands of mortgages in the U.S. today that are in default or in foreclosure. This is a real predicament for the homeowners who took out adjustable rate loans 4-5 years ago and now are saddled with a payment that they cannot keep up with. The government stepped up and initiated a giant mortgage restructuring plan to help, but the lenders do not seem to be so wild about this idea. The guidelines around the restructures are too strict to help many of the homeowners that are in a bad spot today. Given those factors, the hard money residential lenders are preparing for their hay day.
The hard money lenders are there by the groves to help these homeowners save their homes, as long as the borrower can meet the criteria that they require. The hard money loan criteria are a little different than that of a conventional loan. It is based more on the value of the property than the owner’s ability to pay. That is a good thing considering that many of these homeowners have a damaged credit score thanks to late pays on the mortgage and soaring credit card interest rates. The hard part of the qualifying for a hard money loan is the value of the home, as on top of everything else, the value of real estate has dropped.
As long as the borrower has more than 30% equity in the home, there is a good chance that he may be able to save the property from bank foreclosure or short sale. Granted, the borrower will now pay more interest and the loan will be expensive to procure, but he will get to keep his home if he can continue to make the new payments on time. There is both good news and bad news here but for both the homeowner and the hard money residential lenders, there is at least hope.