A few years ago, I had a crop of refinances all paying off one particular man. I would guess that it was 6 cases in a three month span whose current mortgage holder was the same guy. It didn't take long before I realized that all the borrowers were elderly and extremely poor. Without getting too involved into why these folks got mortgages from this man in the first place, I processed all the payoff requests through his closing agent. They were all 3 year ARM loans, none had been delinquent on payment, and when I got the statements in, they ALL had late fees, back interest, additional fees, etc. Our office attorney at that time made the calls and got the excessive fees reduced or struck entirely on each one. One of the borrowers was smart enough to get "return receipt" mail on each and every payment, so theirs was easy to fight. They ALL qualified for conventional mortgages, and ALL the appraisals were almost double what the payoffs were. Anyway, I hated those people paying 10 and 15 % interest rates and wondered why they did it. At each closing, they all said they were approached by the man directly, and basically talked into it. I never asked, each just volunteered that information. One cried knowing that loan would be paid off, she was being told by the lender that he was going to take her house if he didn't get paid off by the balloon payment date.
More recently, I sat in on a closing with a different private noteholder. This man seemed to care about the people he was lending to (no relation, he does this for a lot of people). The loan was a higher % than conventional mortgages, but there was an option of whether they paid interest only, or a full payment, and the payments didn't start for a year, interest free. The lender told me that the borrowers had hit terrible times, and he had lent to them before, and wanted to help them keep their home. I was floored. I did not expect such great terms and conditions. The lender really did care if those folks got to keep their home. He did not know them outside the transactions he had lent for before.
Most of the private lenders I've dealt with are in between these two men. They are not predators, nor are they overly generous. The folks I've dealt with understand that private lending has a purpose, short terms solution to getting someone a home/ keeping a home. They get paid handsomely for this assistance, but the people they've lent to in most of the cases had no other real option.
Anybody else had really good or really bad private loan experiences??
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