Detroit Hard Money: Not all hard money lenders are alike.

Several weeks ago I attended a webinar held by a hard money lender from the West Coast. Everything that he said was typical of hard money programs presented to potential mortgage investors UNTIL he started talking about the borrowers signing a deed in lieu. If you don't what a deed in lieu is, it's a document that will be recorded in the county where the property is located to avoid the foreclosure process. The borrower, by signing the deed in lieu, deeds the property back to the lender "in lieu" of a foreclosure. These documents are ONLY to be used when foreclosure is imminent.

This is where I had a problem with this presentation. This particular lender informed everyone that his extra protection for the mortgage investor was to have the borrower sign the deed in lieu at the same time they signed their loan documents. Over the years I've spoken to many attorney's about this practice, by others, NOT US, and they've said this is a big no no!! You cannot allow a borrower to waive his legal right to the full foreclosure process and their ability to redeem the mortgage.

The pitch in this webinar was their ability to take back the property quickly through this "pre-signed" deed in lieu, which could be recorded as soon as the borrower was late on his payment. Regardless of whether the borrower agrees to it or not, a judge I'm sure would come down heavily on an individual or company that was convincing borrowers to waive their legal rights.

So the next time you hear anyone suggesting this practice, avoid any dealings with them whatsoever. Their problems can become your problems.

Any questions give us a call at 248-547-3006. Or visit our new improved web-site at www.metro-mi.com

Trent Dalrymple

Director of Investor Relations

Metro Mortgage Investments

26711 Woodward Ave., Suite 301

Huntington Woods, MI 48070