The New Face of Hard Money

Mortgage and Lending with All California Lending BRE# 01458390

Hopefully as you read this you are staying safe and healthy.  The Covid pandemic has turned many aspects of our lives upside down.  Real estate financing has not been immune to the crisis, and today's alternative loan options look much different than they did only a few months ago.  Much has changed, but financing is still available!

One of the first major changes we saw was the loss of most of the Non-QM market.  This is the market that was filling the subprime market of the past.  Most of these loans are simply not available today, with lenders suspending operations indefinitely.  These were loans with higher loan to value ratios, made to borrowers with credit issues or those in need of alternative documentation requirements for their income.  

Along with the loss of this market, many of the semi-institutional hard money lenders also suspended operations.  These were lenders who also relied on selling their loans on the secondary market.  This leaves a large hole in the financing that was available at the start of the year.

The private money and hard money loans available today are still in flux.  With the uncertainty surrounding not only the health impacts, but impacts to the economy and potential impacts to the real estate market, many investors have turned to cash as a safe haven.  Loan to value ratios are slowly coming down, and rates in the mid single digits are becoming rarer. 

For property that shows pride of ownership, located in areas that did not see a large decrease in value during the last market crash, loans are still available at attractive private money terms.  We are still seeing hard money loans that can reach 75% loan to value, even 80% loan to purchase price, for solid files on quality properties.  The areas where the loan to values seem to be slipping are the more rural properties, large land acreages and development deals.

During this transitional time, we are still helping our clients with their financing needs.  Clients who have had loans fall out elsewhere, clients who were approved with bank funding that is no longer available, clients with properties in need of rehab or repair - we can still help get deals closed.  We are very creative, and can structure loans in a variety of ways to help close a deal.  We can do seconds, even thirds, on properties to obtain cash quickly for investment or business needs.  We can blanket multiple properties to bring our loan to value ratios into line.  We can help secure loans on properties with substandard conditions - even partially completed homes.  We can also work with seller carry back situations, leveraging a subordinate seller carry much like true cash into a deal.

In addition, we have adjusted our services to run all online.  There is no need to come into an office - we can take paperwork electronically.  We have been able to get some site visits done remotely via Facetime and Zoom.  Appraisals we've been able to use exterior inspections with pictures taken by the tenants to show interior condition.  Remote notaries can come to your location and work with you to sign while social distancing.

If you have a deal that is languishing, are having trouble obtaining funding, or have an out of the box scenario that you want to discuss, give us a call.  We'd love to talk to you.

Stay safe and healthy!

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