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Hard Money Lenders Help Those With Bankruptcy and Foreclosure

Since the credit crunch of 2008 began, hard money lenders have stepped up to fill the void in the area of lending. For those who have had a bankruptcy or foreclosure on their credit in recent years, bank loans are simply not an option. These borrowers have had to obtain hard money and private money loans for badly needed credit to finance their business and investment activities. While there are some hard money lenders who will not lend to people with a bankruptcy or foreclosure on their credit, most private lenders are stepping up to provide these loans in abundance. 
Because most hard money lenders lend on the asset being used as collateral for the loan, they are more likely to provide a loan to someone with bad credit. There are exceptions to this however, as some private money lenders are now starting to pull credit prior to making a loan. In fact, some potential borrowers are shocked that a credit report is a requirement of a hard money loan. These are the people who remember the days when a hard money lender would lend 100% of the purchase price on an investment property, and in some cases would even provide the money for repairs. Unfortunately, most of the hard money lenders who made such loans are no longer in business.
Bank lending is still very tight and inflexible, and will likely remain so for many years to come. For those who have had major hits to their credit in the last several years, hard money loans are their saving grace. Without the availability of private, non-bank financing in recent years, the recovery of the real estate market may have been a much slower process. For those borrowers with bankruptcies and foreclosures on their credit, the high interest rates charged by hard money lenders is just the cost of continuing to do business.

  • September 19 2012 - US
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Answers (7)

What happens after the 90 day to 5 year loan?  Is it a balloon at the end?
  • September 19 2012
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Profile picture for wetdawgs
Out of curiosity, what are the costs of a hard money loan?   interest rates?  Fees? 

What are the down payment requirements?

Your posts make it sound like a winning proposition, but you never respond to questions.   Curious.
  • September 19 2012
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Bank lending is still very tight and inflexible 
=====================
i.e. the banks won't lend to people who have already proven they are financially irresponsible; yep, that's being tight and inflexible.
  • September 19 2012
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These are the people who remember the days when a hard money lender would lend 100% of the purchase price on an investment property, and in some cases would even provide the money for repairs. Unfortunately, most of the hard money lenders who made such loans are no longer in business.
 
The only unfortunate part is that such lending practice ever existed in the first place. Hard money never really helped anyone except the one collecting the inflated commission.
  • September 19 2012
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With the market changing their are various portfolio lenders that might get a better alternative.  Rightn now we are doing conventional laons with 20 % down 1 year out of a bankruptcy, short sale, or foreclosure.  On the FHA side we are doing loans 2 years from Bankruptcy.  THis would be a better option then the extreme cost that come with Hard Money loans.
  • September 24 2012
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Profile picture for winstonhenry317
Do the lenders provide 65% of the ARV without up-front fees and credit requirement? If the do for both residential and Commercial (hotel/motel), I would like someone to contact me. 
  • May 01 2013
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Profile picture for winstonhenry317
Is there any financing for residential auction property in Indiana. If so, how long does it take for lenders to provide that financing? Can a lender provide that financing for properties that are being auctioned in Indianapolis, IN? I would like to know. 
  • January 22 2014
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