In my previous post, I discussed a checklist of factors to consider when evaluating loan requests for commercial properties. Today, I will list those factors to consider when looking at residential requests. Notice that there is a crossover of many of the factors listed from the commercial loan underwriting checklist.

 CHECKLIST OF FACTORS FOR RESIDENTIAL OWNERS SEEKING A HARD MONEY LOAN:

• Location - is there a large inventory of homes on the market? if so, how long have they been on the market and have there been substantial price reductions? Are there numerous foreclosures in the neighborhood? What is the demand for these types of homes? Is the home situated in a sought after school district? Is there shopping and transportation close by? Is there pride of ownership in the neighborhood? 
• Property Type ( Sfr, condo, townhouse, tic, etc )
• Property Condition and Floor Plan ( Older, newer construction, remodeled, fixer, etc )
• Loan Amount  ( we do loans from $100K - $20M )
• Loan Position (1st or 2nd?)
• Property Value  ( Is there a recent appraisal or broker opinion - who did the evaluation and when?)
• Purpose of the Loan ( What will the funds be used for? Is it a purchase or refi? If it's a purchase how much are they putting down and what is the source of the downpayment? If it is a refi, are they getting cash out? If it is cash out , what will he funds be used for - business or personal reasons? Will they be replacing an existing loan - and if so with whom?)
• How Long Is the Loan Needed For?
• What is the Exit Strategy? ( Refi, sale, etc )
• Any Other Collateral Available?
• What is the Borrower's Income and Overall Financial Situation?
• If a Refi, How Long Have They Owned the Property  (What did they pay for it and any improvements?)

HERE IS A LIST OF ITEMS TYPICALLY NEEDED TO ASSIST IN UNDERWRITING:

• 1003 Loan Application W/ a Schedule of Real Estate
• Credit Report  
• Preliminary Title Report ( w/ payoffs or explanations on items listed )
• Appraisal and/or Broker Opinion Using MLS Data W/ Digital Photos
• Purchase Contract ( for purchases )
• Any Reports ( inspection reports -  termite , roof, foundation, etc )
• Explanation for Use of Funds and Exit Strategy
• Copy of Senior Note and Current Mortgage Statement ( if doing a 2nd )
• Rental Agreements (for non-owner occupied loans )
• HOA documents ( for condos, townhouses, etc )

Appraisals simply do not tell the whole story. I like to carefully review MLS data on properties located within 1/4 to 1/2 mile of the subject property and look at all of the  Actives, Pendings, Solds, and Withdrawn Properties and focus on days on market  - usually using only data within 3-6 months of the current date.

Note: if the borrower is married or holds title with another individual or entity, it is important to know that all parties to the loan are on board with the concept of doing the loan. If the property is owned by a Trust, an estate,  or an LLC for example, then it is also important early on to get the proper documents relating to the particular entity/ borrower to the title company for their review.

For more information or a quick quote, contact me at:

Tel: 415-760-2338  or Email: agilberg@aol.com

Reminder:  We are a direct hard money lender lender doing both residential and commercial hard money loans covering all of California including:

San Francisco Marin County Sonoma Santa Rosa Napa Contra Costa Walnut Creek Alameda County Oakland San Mateo Hillsborough Redwood City Santa Clara County San Jose Palo Alto Santa Cruz Monterey Carmel Los Angeles Beverly Hills Santa Monica Palos Verdes Venice Orange County Laguna Beach Newport Beach Irvine San Diego La Jolla Carlsbad Del Mar Coronado Lake Tahoe Sacramento