Hopefully everyone is staying safe and healthy these days. It's been crazy these past few weeks. In the lending world, that craziness racheted up a notch when I started getting calls that non-QM loans are being suspended or canceled. Between Friday and today that has been a common theme. It reminds me of the subprime bust, with things changing very abruptly due to the secondary market issues. With this issue, there are many borrowers who had a loan ready to close last week, only to find out they have no loan at all today.
While this is not an ideal situation, there is a solution. Hard money loans have been around and are incredibly useful tools in times like these. I've been through a major market crash and have built relationships with investors, funds and groups that will stand the test of time. While there have been a lot of new comers to the hard money lending world the past few years, many of them are capitalized in a similar manner. That is they rely on a secondary market to purchase their loans. Due to this they were able to scale their business and offer attractive rates and terms. The downside, however, is that when the secondary market dries up, their business model does as well. When there is no one to purchase large buckets of loans, they cannot continue to make loans - they are not set up to hold them.
On the other hand, relationship driven brokers like myself work with investors, groups and funds who make individual loans and hold them for the yield. I do not rely on selling large buckets of loans, but rather structure and place loans on an individual basis. When the easy money was readily available, there were some scenarios I simply could not help with as my pricing could not compete, or my funding sources were not as aggressive as some of these more institutional sources. When the market goes through a correction, however, my sources are still funding loans, my clients are still closing and deals are getting done.
If you are in the situation where you or your client has lost your loan, give me a call. I'm happy to discuss options that can be provided. Even though times are crazy, markets are crazy and financing seems to be getting tighter and tighter, I'm still ready, able and willing to get deals funded. Visit me online to learn more about our loans at ACALending.com, or call me directly at 877 462 3422. Good luck, stay safe and wash those hands!
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