{"id":1619,"date":"2007-07-02T17:39:39","date_gmt":"2007-07-03T00:39:39","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1619"},"modified":"2007-07-02T17:39:39","modified_gmt":"2007-07-03T00:39:39","slug":"hard-money-it-aint-stupid-money","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1619\/hard-money-it-aint-stupid-money\/","title":{"rendered":"HARD MONEY: It Ain’t STUPID Money"},"content":{"rendered":"

Hard money is not stupid money. Pragmatic underwriting guidelines are followed so as to insure the principle that the private mortgage really is a temporary loan, designed to solve rather than to perpetuate the underlying problem. I attempted to define this niche in one of my first posts on Bloodhound<\/a> and followed it up with an hour-long conference call with two private mortgage investors<\/a>.<\/p>\n

Private mortgage loans are not asset-based lending. There must be a demonstrative ability to repay the loan. If the borrower opts to “state” the income, the trust deed broker has an obligation to the investor (and the borrower) to perform due diligence that would suggest that the borrower has that ability. We sometimes eschew traditional underwriting guidelines to demonstrate that ability to repay. Often, we accept a statement of future earnings from the borrower (useful for entrepreneurs). We will review the assets in a retirement plan as reserves to draw upon should that statement of future earnings not materialize.<\/p>\n

Private mortgage loans are not a license to jack up the fees. I often turn away brokered business because of originator greed. Lenders charge points to enhance their yield. A common practice in our industry is for the originating broker to increase his\/her brokerage fee to equal or better the lender-charged points. The result is an unrealistic fee financed by the lender and subsequent decline. If brokers are charging a borrower 1-2 points for a subprime loan, and the loan turns into a private mortgage loan, brokers should not automatically raise their fees because the borrower is “stuck”.<\/p>\n

Values are carefully scrutinized. Appraisals can be manipulated to reflect an approximate opinion of value. It may very well pass the test of a FNMA\/FHLMC underwriter but not the careful eye of the private mortgage lender. Originating brokers would do well to check the local MLS for model matches. If you have an appraisal for $650,000 and two model matches are being offered for sale at $599,000 and $580,000, with an average of 45 days on the Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Hard money is not stupid money. Pragmatic underwriting guidelines are followed so as to insure the principle that the private mortgage really is a temporary loan, designed to solve rather than to perpetuate the underlying problem. I attempted to define this niche in one of my first posts on Bloodhound and followed it up with […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-1619","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":866,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/866\/hard-money-life-as-a-legal-loan-shark\/","url_meta":{"origin":1619,"position":0},"title":"HARD MONEY: Life as a Legal Loan Shark","author":"Brian Brady","date":"January 7, 2007","format":false,"excerpt":"Loan broking in the private mortgage marketplace can be the most rewarding sector of the lending. I have helped families who faced foreclosure due to unforeseen negative events. I've watched a businesswoman land a huge contract because she could access quick capital. I've beamed with pride as a property investor\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2103,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2103\/hr-3915-mortgage-reform-and-anti-predatory-lending-act-of-2007\/","url_meta":{"origin":1619,"position":1},"title":"HR 3915: Mortgage Reform and Anti-Predatory Lending Act of 2007","author":"Brian Brady","date":"October 25, 2007","format":false,"excerpt":"Congressman Banker...err...Barney Frank co-authored legislation to \"reform\" the mortgage business on Monday.\u00a0 You can view the 66-page text here. Bullet Points of the bill include: 1- Prohibition of \"yield spread premium\" as compensation to originators. 2- Mandatory licensing of mortgage originators by a Federal registry or state regulator.\u00a0 This Bill\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6681,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6681\/david-bartels-redefines-mortgage-originators-as-borrower-advocates\/","url_meta":{"origin":1619,"position":2},"title":"David Bartels Redefines Mortgage Originators as “Borrower Advocates”","author":"Brian Brady","date":"January 23, 2009","format":false,"excerpt":"I had fun today because\u00a0 I got to hang out with a bunch of mortgage salespeople.\u00a0 I drove up the 5 to Irvine, epicenter of the sub-prime mortgage industry, to see the High Performance Strategies Seminar, hosted by David Bartels and Greg Frost.\u00a0 David Bartels is an executive with Loan\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":645,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/645\/home-buyer-always-liable-for-mortgage\/","url_meta":{"origin":1619,"position":3},"title":"Home buyer always liable for mortgage . . .","author":"Greg Swann","date":"November 17, 2006","format":false,"excerpt":"This is my column from today's Arizona Republic (permanent link). No fireworks, today, just real estate. Home buyer always liable for mortgage I got a great question by e-mail. It's really a lender question, but it introduces a number of interesting topics. \"Are homeowners personally liable for their mortgages? If\u2026","rel":"","context":"In "Ask the Broker"","block_context":{"text":"Ask the Broker","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ask-the-broker\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":602,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/602\/ask-the-broker-who-is-responsible-for-the-mortgage\/","url_meta":{"origin":1619,"position":4},"title":"Ask the Broker: Who is responsible for the mortgage . . . ?","author":"Greg Swann","date":"November 4, 2006","format":false,"excerpt":"Holy smokes! I get questions for appraisers, for inspectors, for real estate attorneys, for everyone involved in a real estate transaction except the ding-dong Realtor. Here comes a question for mortgage lenders, who are entreated to chime in with better answers:Generally speaking, are homeowners personally liable for their mortgage? If\u2026","rel":"","context":"In "Ask the Broker"","block_context":{"text":"Ask the Broker","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ask-the-broker\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7903,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7903\/fha-and-va-assumable-loans-offer-an-exit-strategy-for-todays-buyers\/","url_meta":{"origin":1619,"position":5},"title":"FHA and VA Assumable Loans Offer an Exit Strategy For Today’s Buyers","author":"Brian Brady","date":"April 16, 2009","format":false,"excerpt":"How can an FHA mortgage or VA home loan sell a home faster?\u00a0\u00a0 When mortgage rates are 10% and the 5% government loan is assumable. I've taken a few pokes at the contributors on Active Rain; John MacArthur isn't one of them.\u00a0 John is a Branch Manager with Long and\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1619"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1619\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}