Today I'm going to take a brief look at credit score factors.  As hard money lenders, credit did not used to make a big difference.  Today things have changed, and even in the hard money world, credit is playing a part in lending decisions.

Most people are in the dark when it comes to the factors that determine their credit score.  Here is a basic rundown on credit score factors:

35% of your credit score comes from payment history.  Late payments, collections, charge offs, repossessions, foreclosures, tax liens, bankruptcies and judgements all fall under this category.

30% of your credit score comes from accounts owed.  Credit cards, mortgage loans, auto loans, lines of credit and installment loans all factor into this area.

15% of your credit score comes from the length of credit history, how long your accounts have been open in other words.

10% comes from new credit.  This includes credit inquiries, both soft and hard.

Finally, the last 10% comes from types of credit used.  A mortgage loan, auto loan, credit cards, etc.  The mix of credit used.

IF you would like more information, take a look at our in-depth write up of credit score factors.

There are many home staging companies in California. However, if you are interested in selling your property, but you don't want to incur the cost for a professional consultation, you have the option of attempting to stage your property on your own.

Home staging in California is quickly growing in popularity, especially among those flipping houses for profit.  A well staged home can help the property sell more quickly, and for more money. This is due to the fact that a properly staged home gives a better first impression.  Through a good first impression and excellent curb appeal, it makes sense to spend some effort on staging your home.

If you are planning a home staging project in California, there are several things you will want to keep in mind. First, the goal of staging a home is to make it appeal to the widest range of buyers possible. What you believe is in good taste may not be what the majority of people feel is sophisticated, elegant, or in good taste. This is one of the toughest hurdles to overcome, and is one reason to consider hiring a professional for consultation, even if you do the work yourself.

Staging companies are intimately familiar with what works well in the current market, and can make a wide variety of suggestions to ensure your property appeals to the largest amount of homebuyers. In addition to this, home staging companies in California are familiar with what buyers in specific price ranges like as they usually work closely with real estate agents in the markets they target.

If you are planning on doing your own home staging in California, there are a few things that you will want to keep in mind. A clean home shows much better than one that has not been thoroughly cleaned, and this needs to be at the top of your list. In the case of home sales, a clean property is one that has been cleaned from top to bottom.  A good suggestion is using a cleaning service for this, there is some cost involved, but the property will be cleaned properly.

We're talking about cleaning the grout between the tiles in the bathroom, cleaning under any and all furniture and more. After a complete cleaning has been done, it is much easier to then work on the actual staging of the property.

There are many resources on the web for staging your own property.  You can start by taking a look at this free home staging checklist, it will give you the basics in a short, concise manner.

Commercial loans are in the hot seat these days.  As the real estate problems expand into the commercial loan segment, we are seeing a change in how commercial loans are made.

Accourding to Realpoint Research, delinquencies on commercial loans hit almost $29 billion, that is a $10 billion dollar increase in June alone.  This has been led by delinquencies in California commercial loans.

This is a huge increase in delinquent commercial loans year over year, close to 600%, and promises to put an additional damper on new commercial loans being funded.  To compound the issue, at the same time of rising delinquencies, vacancies are also increasing, making it more difficult for borrowers to obtain institutional financing for a refinance of their commercial loans.  With debt coverage ratios skewed, many find themselves in a situation where there is no take out loan for the existing financing.

One area where commercial loans are still moving is the hard money segment.  With the huge downturn in residential real estate, commercial loans are still seen as a "safe" investment by many private investors.  With institutional lenders tightening standards, and with commercial properties unable to meet the strict debt coverage ratio guidelines of many banks, hard money commercial loans have become a viable alternative to many borrowers in need of commercial financing.

While hard money lenders typically do not underwrite based on the debt coverage ratio, it is a consideration these days in the tightening lending environment.  Many banks will require a 1.25 debt coverage ratio, but a hard money lender may be willing to work with DCR's even slightly below 1, depending on the property type and strength of the borrower.

I specialize in private money financing, and can help property owners find a creative source for their commercial loans.  If you are in need of commercial loan financing, and are having problems with institutional lenders, feel free to call or email me to discuss your situation.

There is a lot of buzz going around right now regarding the new bankruptcy legislation.  If you have not heard, this legislation is set to allow bankruptcy judges the authority to modify loans on primary residences.  While the banking industry is opposed to this legislation, I don't see any way it does not get put into effect.

This bankruptcy legislation is referred to as a "cram down" by the banking industry, but truly it will help to stabalize the real estate markets.  Currently homeowners are at their lenders mercy when seeking a loan modification.  From my experiences and conversations, the lenders are not easy to work with, and are very reluctant to offer a true modification.

What's more, the modifications that are being offered are more like band aids, short term fixes.  Without long term fixes, there is certain to be more foreclosures on the way.

This next wave of foreclosures, however, will be different than the first.  So far we have seen people who could not afford to make their payments, people who maybe should not have owned a home.  We have also seen the adjustable loans and option arm/neg-am loans that have reset to much much higher payments that are not affordable.  This new wave of foreclosures, however, is people making business decisions to walk away from their homes.

When homeowners make a business decision to walk away from their home, it produces a foreclosure that is not on anyones radar.  These are people who do have jobs, good credit and the income to make payments on their homes.  The business decision, however, comes when they owe more than their home is worth, or maybe they have a long term adjustable loan that the bank will not renegotiate.  This wave of foreclosures is the wave that can be prevented with the new bankruptcy legislation. 

By allowing bankruptcy judges to adjust the principal balance of a loan, and adjust the payment, it forces the idea of a loan modification to work.  It may not be the best solution, but we are in a terrible mess right now, and the only way out is to slow the foreclosures.  This legislation has the potential to do just that.

I work with hard money lenders, and talk with people in all types of situations every day.  I truly believe that something of this nature is needed.

Check back in, I will be looking at the legislation in more detail as it takes shape!

With all the talk about loan modifications, I decided to start putting together some resources for those looking to do their own loan modification.  There are a number of companies out there today that will attempt a loan modification on your behalf for a fee, but for those who want to do it themselves, I've found resources to be somewhat slim.

I've put together a list of loss mitigation contacts and phone numbers.  This is a pretty good sized list, with many of the major lenders included.  Phone numbers change for these loss mitigation departments, and I have listed multiple numbers for many of the lenders included.  If you are having problems finding a number for your lenders loss mitigation department, take a look to see if they are on this list.

I have also put together a sample hardship letter.  This is a basic format to use if you are behind on your mortgage and are looking for a loan modification to help.  You can copy the text to a word doc and simply change the sample to meet your needs.

For more information on loan modification check back in.  I will be adding and updating resources over the coming days and weeks as I am able.  There should be free resources for people who are looking to modify their own home loan.  Take a look at my posting about loan modifications, and check out the loan modification resource links in the right hand navigation links.

Loan modifications are the new buzz among real estate professionals and homeowners in distress alike.  With the current financial mess, and the continued slide in the real estate markets, banks are now starting to ramp up efforts to keep homeowners in their homes. 

Financial institutions don't want to foreclose on your house.  It costs them time and money, and they would greatly prefer to have a borrower who can make their mortgage payment.  With the recent destruction of the housing market, though, many borrowers don't have options previously available.  If you lost your job three years ago and could not make your mortgage payment, you could simply sell your house and buy something smaller or rent.  If your company transferred your job, you would just sell your home and move.  With one in seven homes in the United States underwater (there is more owed on the property than it is worth), those options simply are not there today.

These days, many are stuck with the loan they have, the home they have, and it really seems overwhelming to try and work with your financial institution.  Don't feel that way.  It can be a tedious process dealing with the bank, but if you work at it, you can succeed in working out a loan modification with your bank or lender. 

The first thing to do is actually contact your financial institution.  It would amaze most people to know how many people get in trouble, and simply do not ever contact their bank.  Call the customer service number that is located on your monthly statement and ask for the loss mitigation department.  Keep this number, along with your loan number, handy, you will be using it often if you are traveling this path.  The loss mitigation department is who you want to talk to, whether you are looking for a lower rate, a principal reduction, a short sale or any other loan modification.  When you call them, you should have a call log as well.  Log each call, who to spoke with, and what was discussed.

When you call, they will ask for some paperwork from you in order to review your file.  I suggest having a good game plan before moving forward from here.  Decide what you want.  You need to know what you want, and ask for it.  Do you want a principal reduction, a short sale, a reduced interest rate?  There are many options, and how you decide to proceed can impact on the outcome of your request.  This brings me to the next topic.  When you call, they will want some paperwork.  Usually this includes an expense itemization, hardship letter and income documentation.  When they start asking for paperwork, many people think they need professional help.  I'm not a huge fan of this, but that is my personal opinion.

There are many loan modification companies out there, they employ attorneys, and will go through the loan modification process for you.  Most charge between $1,200 and $4000 for their services, payable upfront.  I really do not encourage clients of mine to take this step, unless there is something amiss with your original loan paperwork, or some legal aspect that you need to correct.  For the most part, I believe you can do this yourself.  What I do suggest, though, is to get yourself informed so you understand what you are doing and what you should expect.  Take a look at this group, they have a loan modification package that gives you the information you need to do this yourself, saving thousands of dollars upfront.  In addition, they have been around for a while, and have been doing modifications for their clients even before this current downturn.  Many of the loan modification companies you might hear about have just sprung up to take advantage of the market.  I would undertake this loan modification process myself, with some research and work, you can have a  do it yourself loan modification..

Good luck, next I will be looking at BPO jobs and services in more detail, check back in!

Hard money loans are a good way to take advantage of the opportunities created by the downturn in today's housing market.  I get a lot of calls from real estate investors looking for hard money loans to purchase and rehab property they can purchase below market value.  Many are looking for 100% financing, which is a tough thing to find in today's lending climate.  With that being said, there are programs that do allow for 100% acquisition financing on these rehab transactions.

The guidelines for these 100% acquisition and rehab loans are pretty straight forward.  You will need cash or additional collateral in order to qualify, if you have no cash or additional property with equity in it, you should find a partner.  How much cash you will need depends on your particular transaction.  Very basic guidelines for this program allow for 100% financing on the acquisition of real estate provided you are able to bring in cash or additional collateral to cover the cost of rehab, 4-6 months of interest reserves and points and fees.

Depending on the particular property, acquisition cost and after repair value, we can sometimes fund more than the sales price.  This program does not require an appraisal, but appraisals and/or comps will help us in determining the ARV.  These hard money loans typically are written for 12 months, no prepayment penalty, at 12.5%.  There is no minimum credit score to qualify for this program, but major credit delinquencies will need to be explained.  Recent foreclosures, bankruptcies, etc. are items that may require mitigating factors.  Experience with rehab projects are a plus, but also not required.

Hard money lenders have a reputation for being quick, but with the recent credit issues, many hard money loans are taking much longer to fund than they have in the past.  This program usually has a 2 week turn time to funding from application, but can close quicker if need be. 

Feel free to contact me with any questions. 877 462 3422. This is primarily a California program, but we can help in other Western US states.

America is going through tough financial times; it is no secret that many Americans have fallen victim to unscrupulous lending practices and that the most important terms and conditions were not disclosed during the negotiation of a home loan.  We are going through a financial bubble and because of reforms to lending practices home owners are desperate because they no longer qualify for new loans, either because of lower property values or more stringent lending guidelines.
 
 As the saying goes, desperate times call for desperate measures but, the measures that most people are taking are definitely not the best ones.  A few years ago property owners counted with their home equity to bail them out of any financial problem.  Because of the current situation, properties have lost tremendous value and there might not be enough equity to refinance a loan.  Due to this, many Americans are turning to credit cards to maintain their lifestyle.
 
 But the solution to a tight financial situation is not to turn to credit cards because their interest rate can go as high as 30% (compounded daily) and they will just add to the problem.  Hard money loans on the other hand, are better financial instruments which provide more affordable interest rates and terms that can help a property owner sail through this economic recession.
 
 Hard money loans can go as high as 70% LTV (loan-to-value), although most would like to keep the LTV below 65%.  Hard money loans are available on almost any property type, commercial, land, investment properties etc.  Hard money loans can also be issued on an owner occupied property to relieve financial stress.  These types of loans can be amortized over a period of 30 years according to the borrower needs.  Even with hard money, however, it is important to be able to show the ability to repay the loan.  The huge advantage with hard money these days is the flexibility with which you can show that ability.  Bank statements for self employed borrowers, contracts and other creative ways to show the money being made that will enable the loan to be repaid.
 
 Stopping Foreclosures with Hard Money Loans
 
 Because of the banking crisis more and more home owners are losing their properties to foreclosure, the sad part is that many of those foreclosures can be stopped or avoided if the homeowner takes appropriate action.  In California alone foreclosures have been up 260%, this figure is based on market analysis performed on July, 2008 by housing authorities.  Hard money lenders often times are the only option for homeowners who no longer qualify for institutional loans under the new and more stringent lending guidelines.
 
 Hard money loans can be used in order to salvage a property and avoid foreclosure.  However, a property owner needs to act as fast as possible in order to avoid interest and penalties from accruing and worsening the situation.  Additionally, hard money loans offer the ability to cross collateralize multiple properties.  If there is not enough equity in one to get the job done, you still have options for financing.

I deal almost exclusively with hard money lenders, working with both borrowers and brokers to match a particular transaction with an investor.  In addition, I do have access to in house funds and serve as a direct hard money lender as well.  This is my business, I do conventional loans for family, friends, referrals, but my main source of business is hard money.

Hard money today is taking the place of what sub-prime used to be.  The glaring difference, however, is the loan to value requirements.  In today's hard money lending environment, 65% loan to value is typically the maximum you will find.  I do have some San Francisco hard money sources still going to 70% in San Francisco and Marin counties, but for the most part, that is a thing of the past.

Residential hard money loans have taken on a different face than they had only 12 months ago.  Gone are the days of owner occupied anything goes lending.  Today, not only is the loan to value important, but it is also important that the borrower can show the ability to repay the loan.  Typically there are no DTI ratios per say that need to be met, and we can get creative if the situation warrants.  The benefit of working with hard money is the flexibility in underwriting.  If the requested loan is truly going to help the borrower's situation, there is typically a way to document that benefit.

Non owner occupied residential hard money loans are a bit less heavy on the documentation of income.  These loans are still primarily loan to value driven.  The topic to touch on with non owner occupied residential is the fix and flip scenario.  Unless you have excellent credit and some money in the bank, there is not much financing available that will provide 100% acquisition.  I do have access to some 100% hard money programs in the San Francisco Bay Area that will use appraised value vs. purchase price, but this financing is slowly drying up, not to return until this market sees some kind of rebound.

Additionally, land loans are becoming increasingly difficult to place.  In today's market, you can expect to find money for 40-50% loan to value of your land.  That value can be very subjective as well.  Additionally, if you are building, you can usually expect some type of fund control on any cash out for land.

Hard money commercial loans are also loan to value driven, capping out around 65% (except in the San Francisco and Marin Counties, where 70% is still realistic).  The good thing about hard money commercial loans comes down to the debt coverage.  Banks are pretty tight on that debt coverage number, wanting to see 1.1 - 1.25.  Hard money commercial loans are more concerned about the collateral value of the commercial property, and even with a debt coverage below one, can make sense.

If you are looking for a hard money loan, please feel free to contact me for more information.  We are direct lenders of funds, and I also have resources and relationships with many hard money lenders.  As a hard money specialist, I can work with you to package your loan properly and help you get it funded.  You can reach me at 925 513 3942, ext. 240, or you can email me at cgoulart@aboutcaliforniahomeloans.com.

Visit my real estate blog, learn about California hard money or search Contra Costa Real Estate.

With all the tightening guidelines, there is still one bright spot in the mortgage lending world.  FHA loans are expanding their offerings, with higher conforming loan limits (see these higher conforming loan limits by California county here), down payment assistance programs and other legislation in the works to expand these programs, FHA loans are fast becoming the loans of choice.

One of the largest benefits of FHA loans these days is the potential for 100% purchase financing.  FHA loans cap out at 97% loan to value on a purchase, but with down payment assistance programs, and allowable seller credits up to 6%, it is realistic to be able to structure a purchase loan for no money down, or very little money down.  Essentially, 100% purchase financing.

Additionally, for many borrowers who have seen the value of their homes decrease, all the while watching the date creep closer and closer to when their adjustable note is going to adjust, FHA loans offer high loan to value refinance options.  FHA loans offer refinances up to 95% loan to value.  Additionally, FHA loans do not automatically cut the LTV in markets deemed declining as Fannie Mae and Freddie Mac loans do. 

This offering of high LTV loans for refinancing allows many homeowners the ability to refinance out of their adjustable rate mortgage, even though their loan to value may be higher than when they originally took out that loan.  Pair this with the increase in loan limits, and this has opened the door to many California homeowners to use these FHA loans, whereas their loan amount may have been too large to fit under the limit before.

For those looking for a California refinance, FHA loans offer a great option to take advantage of the historically low fixed rates that are still on the table.  Feel free to contact me for more information on FHA loans, or if you are in the market for a purchase or refinance in California.

Visit my real estate blog for more information on various loan options and current events in the real estate and mortgage world.  Learn about California hard money lenders, a viable option in today's market for borrowers of all credit types, or search for Contra Costa Real Estate, where values have declined to a point where you can now purchase a rental property here in California, less than an hour from San Francisco, and be cash flow positive.