America's Leading Expert on Hard Money Lending Leonard Rosen
With the recent upsurge in residential foreclosures nationally,
homeowners are finding themselves in a very unusual predicament. Over the last 7,
borrowers with less than perfect credit fell into a category called :sub prime
borrowers". This class of borrower was able to obtain a mortgage with little or
no documentation.
The lenders were all too anxious to lend money to this class of borrower. Consequently,
many borrowers took advantage of possibly a once in a life time opportunity to own a
piece of the American dream.
Then reality set in. Many borrowers purchased a mortgage with a negative amortization option
along with interest only options. Rather than pay the fully amortized 30 year rate, they only
paid the interest and in many cases paid the negative amortization rate.
The problem with this scenario is that mother time has caught up and the once easy affordable
payment has re-set and the borrower no longer could afford to keep the property and make timely
payments when the adjustable rate changed.
The question is, who is at fault? Many politicians and consumer agencies believe the mortgage
companies are at fault for funding to this class of borrower. The mortgage companies qualified
the borrowers on the teaser rate of 1%, not on the fully amortized 30 year rate. This turned out
to be a perfect recipe for disaster.
We now have thousands of borrowers across the country facing foreclosure. So what’s the
solution?
A borrower may be able to obtain a hard money loan based on the equity and value of the property.
This is called a hard money mortgage or private mortgage. The interest rate is considerably higher
than a sub prime loan but the borrower is able to keep their property and develop a game plan rather
than lose their home to foreclosure.
Many call hard money lenders "satin" for taking advantage of a homeowner in desperation.
I suggest that the hard money lenders who offer this type of hard money mortgage are "angels".
Without a safety net, many borrowers would surely lose their house. Hard money mortgages, when properly
used, can be a very useful tool and a life saver.
I prefer to call hard money lenders "Angels".
