The truth about hard-money loans

Costs, terms often more onerous than conventional mortgages

By Inman News Feed
Add Comment Add Comment | Comments: 29 | Posted Mar. 26, 2013

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Costs, terms often more onerous than conventional mortgages

Benny Kass
Inman News®

DEAR BENNY: What is a "hard money" loan? --Irene

DEAR IRENE: Technically, it is a loan that is given in exchange for money, rather than to assist a consumer in buying a house. The latter would be called a "purchase money" mortgage.

Hard-money lenders do not rely on the creditworthiness of the borrower. Instead, they look to the value of the property. The lender wants to make sure that if the borrower defaults, there will be sufficient equity in the property over and above the amount of the loan. Accordingly, you will not get a hard-money loan of 80 or 90 percent loan to value; typically, they will range from 50 to 70 percent loan to value.

Such loans are considered "loans of last resort." If you are unable to get a conventional loan from a bank or mortgage broker, you may be forced to negotiate with a hard-money lender, who often are private individuals loaning money from their pension plans.

And beware: Those loans are more expensive and often have more onerous terms than the standard mortgage backed by the federal government, Fannie Mae or Freddie Mac.

Who typically gets such a loan? If you have bought a house and haven't yet sold your existing one, you might get a hard-money bridge loan. They are typically short-term. Other users are homeowners with bad credit but lots of equity in the home who want to avoid foreclosure. Unfortunately, from my experience, all too often the hard-money lender ends up owning the property.

There are many legitimate hard-money lenders. However, as in every profession or industry, there are some bad apples. Some hard-money lenders are loan sharks whose sole objective is to take your house away from you.

If you need a short-term loan and decide to confront a hard-money lender, please have your attorney review all of the legal documents the lender will ask you to sign. You want the money, but you don't want to lose your valuable home.

DEAR BENNY: We have a time share that we want to deed back to the resort, but they want $1,750 dollars to take back the deed. We are in our 70s and want to know if we can just give the deed back without paying the fee. Can they put a lien on our house? We don't care about credit ratings, since we pay cash for everything. --Don

DEAR DON: You cannot just "give away" the deed. It has to be accepted by the resort and recorded among the land records in the county where the property is located.

If the resort will take back the deed and relieve you from any and all further obligations, I would jump at that opportunity. Obviously, I would try to negotiate a lower buyout or try to work out a payment schedule. However, from the many readers who have time-share problems, your situation is unusual.

I do want to comment about your statement that you don't care about your credit rating. You may pay everything in cash and be a multimillionaire, but there may come a time when you will need credit, and a poor credit rating can, and will, haunt you for the rest of your life.

DEAR BENNY: I live in a 125-unit condominium. Recently, our board of directors signed a contract for almost $1 million to upgrade our elevators. I believe that the board did not get any bids and just went with one company. Is there any law requiring more than one bid on any one job, especially one as large as this? --Henry

DEAR HENRY: To my knowledge, there is no law on this subject; it's really a matter of common sense. And in a community association, it may also be a matter of fiduciary duty.

If you lived in a single-family home and wanted to do major construction, I am sure that you would get at least two, if not three, bids on your project. You would meet with each prospective contractor, get references and make sure they have the appropriate licenses to do your job.

Why should this be different in a community association? Your board of directors is spending your money and it has a fiduciary duty to you (and all other owners) to be prudent. Accordingly, to just get one bid is, in my opinion, unacceptable and may actually be a violation of the board's collective fiduciary duty.

Equally important, there is often suspicion on the part of owners that board members are getting kickbacks from the service providers. Clearly, just accepting the first bid adds to this suspicion.

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COMMENTS

Comments 1 - 29 of 29
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1. Anonymous said... on Jun 13, 2013 at 10:42PM

“Dear Benny: I'm a new real estate investor and I'm looking for good creditable hard money lenders. Can you recommend any?”

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2. Charmcaster said... on Jul 16, 2013 at 01:35AM

“Hard money loans? There are people who thinks it easy to cope with this kind of loan. For me, one that should be considered as hard money loan is the 401(K) loan where many of us suffered in paying for it. Despite 401(k) loans making good financial sense in theory, the number of 401(k) loan defaults is still much higher than normal. A number of people have trouble paying them back once they borrow from their retirement funds. If you need some financial help, get a payday loan.”

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3. Does your business need funding said... on Oct 12, 2013 at 05:39PM


I Mr Nicholas Williams own a legitimate loan company that offer out reliable good loan offer at an affordable low interest rate of 3% for the period of 1 to 30yrs only ,i issue out different types of loan ,loan such as personal loan student loan company business loan private and public investor loan so for more details if interested reach us via email:nicholasloanagencys@gmail.com

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4. Nacho said... on Nov 11, 2013 at 12:19AM

“There are lots of hard money loans. It seems like there's nothing but not so great news going around nowadays, but then again a ton of it is down to the press just fear-mongering again because it gets ratings. Anyway, there is something to give some people hope, specifically if they have retirement anxiety. A number of reports revealed that 401(k) plans are beginning to make cash again, after years of stagnation. You can get a cash advance to pay for things while waiting for your retirement account to go up.

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5. Monty said... on Nov 13, 2013 at 06:17PM

“Hard money loans are designed for investors - commercial
Consider a bank that may charge 6% for short term loan for distressed property and hard money that charges 12-14%. You are paying for the "availability of capital' at a premium. A good deal should support such and its usually less than a partner.

Equity investors often take 25-50% of a development, so hard money if used as bridge (most 6 months to 2 years) is a very useful tool

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6. bot said... on Nov 27, 2013 at 05:59PM

“trying to find hard money lender”

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7. darr said... on Nov 27, 2013 at 06:05PM

“trying to find a hard money lender that lend in Sharon hill, Pa that will do a rate & term 1yr the borrow has good credit”

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8. inAmust said... on Nov 28, 2013 at 03:10AM

“People usually turns into hard money loans if they don't have any choice. As an example, after you move to a new place, you never know what your utilities will really cost you until you get that first bill. You may have been anticipating a fifty dollar bill and end up with a two hundred dollar bill. You can pay for the unexpected additional expenses with a payday loan. You would not wish to be late on your first bill. Get more information here

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9. Abe said... on Jan 23, 2014 at 09:58AM

“In response to a few people asking for a credible hard money lender. I have worked with White Glass Lending (http://www.whiteglasslending.com). They have an indepth vetting process that keeps them from taking loans that will default (apparently they don't like loan-to-own). But if they give you a loan, it helps to validate that the property has good investment potential. Hope this helps,

Abe”

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10. Anonymous said... on Mar 12, 2014 at 02:42AM

“Hello everyone?
My name is Mrs Shirley I live here in USA and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of 10,000.00 dollars to start my life all over as i am a single mother with 2 kids I met this honest and GOD fearing woman loan lender that help me with a loan of 10,000.00 dollars, she is a GOD fearing woman, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Shirley that refer you to her contact lady lopez via email: Ladylopezloaninstitute@gmail.com
thanks and God Bless
Mrs Shirley”

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11. VA Lender said... on Apr 7, 2014 at 02:12PM

“As with anything, there are positives and negatives to each hard money lender. A good one will provide much more than just capital, they have expert local knowledge, a network of experts across related areas (e.g. architects, permit expediters, etc.) and a great feel for project success. For example, on in Washington DC and Northern Virginia is: www.congressionalcapitalva.com”

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12. Bernard Butty said... on May 21, 2014 at 01:16PM

“We offer fresh cut bank instrument for lease, such as BG, SBLC, MTN, Bank Bonds, Bank Draft, T strips and others. Leased Instruments can be obtained at minimal expense to the borrower compared to other banking options. This offer is opened to both those and corporate bodies.
We are RWA ready to close leasing with any interested client in few banking days, if interested do not hesitate to contact us via email:

All relevant business information will be provided upon request.
If Interested kindly contact me via Email:~
Mr. Bernard butty
Email: leasebutty.bg@gmail.com
skype: butty.bernard”

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13. james said... on May 27, 2014 at 01:13AM


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Report Violation

14. James white said... on Jun 11, 2014 at 08:25PM

“Do you need a loan to start up a business, here is the right opportunity for you.
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7). Gender:
8). Marital Status:
9). Occupation:
10). Monthly Income:
11). Loan Amount:
12). Loan Duration:
13). Purpose Of Loan:

EMAIL:jameswhiteloanfirm@hotmail.com”

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15. Hard money loan said... on Jun 26, 2014 at 07:35AM

“I guess the main truth of hard money loan is that hard money loan is a kind of loan which can be obtained without credit and income information. And the another hard truth is that it can be obtained earlier than any other conventional lenders and banks. If anyone interested in hard money loan and wanted to get loan from hard money lenders then I will recommended you to contact with Lending Universe In. because you can find out over 10000 verified hard money lenders to lend you money. Here are also over 17000 verified appraisers to evaluate your property accurately so that you can get maximum amount as loan.”

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16. mrs Lily brown said... on Jun 30, 2014 at 09:19AM

“Hello,

Here comes an Affordable loan that will change your life for ever,
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Please fill the below application form and get back if interested and
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BORROWER'S DATA

1)Full Names:
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4)State:
5)Sex:
6)Marital Status:
7)Occupation:
8)Phone Number:
10)Monthly income:
11)Next of Kin:
12)Loan Amount Needed:
13)Loan Duration:
14)Purpose of Loan:

As soon as you fill the form above, I will send you my loan Terms And
Conditions Asap in order for us to proceed.

I will be looking forward to hear from you so as to proceed.
With Regards,”

Report Violation

17. Julian Smith Loan Service said... on Jun 30, 2014 at 06:52PM

“Do you need Business or Personal Loan?
Do you wish to refinance your company?
Our company is based in United States and Europe. We give out loan to any individual and company at 3% interest rate yearly. with no upfront fee. We offer this types of loans and much more:

* Personal Loans
* Business Loans
* Consolidation Loans (ETC) if interested contact us at: juliansmiths2014@hotmail.com or call (302)348-9749 for more”

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18. mrs Lily brown said... on Jul 10, 2014 at 12:43AM

“Hello,

Here comes an Affordable loan that will change your life for ever,
I am Mrs Lily Brown a certified loan lender, I offer loan to
individual and public sector that are in need of financial Assistance
in a low interest rate of 2%. Bad credit acceptable,The Terms and
Conditions are very simple and considerate.You will never regret
anything in this loan transaction because i will make you smile.

I Mrs Lily Brown, will render the best of my services to all
legitimate borrowers.You will never be disappointed by me in this
transaction because you were not born to be a loser.Any interested
clients should contact me Asap via Email(mrslilybrownco9@gmail.com)
for further proceeds.

Please fill the below application form and get back if interested and
you will be glad of knowing a loan lender like Mr Manson Parker.

BORROWER'S DATA

1)Full Names:
2)Country:
3)address:
4)State:
5)Sex:
6)Marital Status:
7)Occupation:
8)Phone Number:
10)Monthly income:
11)Next of Kin:
12)Loan Amount Needed:
13)Loan Duration:
14)Purpose of Loan:

As soon as you fill the form above, I will send you my loan Terms And
Conditions Asap in order for us to proceed.

I will be looking forward to hear from you so as to proceed.
With Regards,

Report Violation

19. Ashfaq said... on Jul 14, 2014 at 07:48AM

“Dear Sir/Ma,

We deliver leased BG/SBLC, fresh cut issuance by HSBC Bank London or Hong

Kong to your Organization or individuals with their preferred text verbiage

approved by your bank as a standard ICC formats (Appendix A) and its

Unconditionally Transferrable, Assignable, Callable and Authentication

Verifiable bank to bank. Our terms and procedures are so flexible and

workable by RWA clients who can use our instrument for viable business

transactions, i.e., cash back facilities, Credit enhancement, PPP and

project funding, real estate, construction etc.

Note that our BG/SBLC instrument is specifically for lease and our leasing

price is 5 2 depending on your particular area of usage as our provider

deals direct with top bank executives who has bestowed an unquantifiable

trust in him having carried out large volumes of transactions with them in

the past and at present.

DESCRIPTION OF INSTRUMENTS:

1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A)

2. Total Face Value: Euro .1 M MIN and Euro 5B MAX

3. Issuing Bank: HSBC London/Hong Kong

4. Age: One Year, One Day (extendable allowed)


5. Leasing Price: 5% of Face Value plus 2% commission fees to brokers to be

shared 50/50 between the brokers on both lessor/lessee side


6. Delivery SWIFT TO SWIFT

7. Payment: Wire Transfer

8. Hard Copy: Bonded Courier within three banking days


Subsequently you are required to supply your full contact details (i.e.)

Telephone number:

Email address

Financial Instrument Required:

Amount:

Duration:

Beneficiary's Name:


This will enable us commence immediate procedural step that will enhance a

smooth conclusion of your transaction and to relate your

commitment/seriousness to our able provider who on the other hand has no

time for time wasters or unprofessional individuals or organization with

complexity.


Upon receipt of your response, we shall direct you to our provider who will

supply you with all the needed information to secure BG/SBLC, however its

important you call me for further discussion relating to the refundable

transmission fees required for transmitting MT799 follow by MT760 as you

might be aware that the queue for financial instrument with HSBC is so

enormous and as a result the only way to attend to your file request is

that the fees are paid through the fund providers, also this will shows how

serious a client is (RWA), hence this is done after DOA is been signed

between the lessee and the lessor and a corporate undertaking letter issued

to guarantee fulfillment of the obligation as deem imputed in the contract.



Finally I will assure you of our total commitment to achieving this

transaction as I always look forward to doing more business with you in

future

Contact me via email:bgsblc.forlease@gmail.com,businessfundinginvestments08@gmail.com
Skype ..ashfaqahmedforyou..

Thanks serious clients only no time waster”

Report Violation

20. Lonrenzo said... on Jul 14, 2014 at 10:30AM


Our company is an endorsed mandate of some investors from Arabian Origin with lots of funds. We can

deliver bank papers/Instruments (BG/SBLC/MTN) without an upfront Wire Transfer into provider's account.

We only want clients with ready funds for successful closure of the transaction and also they must be

ready to show the proof of his funds. Interested clients should send an email to

fundinvesmtents55@gmail.com ASAP as we have a lot of interested clients on our table. We don’t

appreciate a long broker chains.

Regards,
Moroni Lorenzo

Report Violation

21. Anonymous said... on Jul 14, 2014 at 01:18PM


My Name Is March Peyton From USA, An X-Scam Victim and how i get back on my feet and be a personal business owner with cars and landed properties….
This is to announce to the general public about a legitimate lender online.
HERE IS MY SUCCESS STORY:
I was in a critical search of a genuine loan lending company were i can obtain a loan of $180,000.00USD some lender’s that Came to me sheep clothing i never knew they where fraud until i was given the terms of their loan and i agreed eventually i was scammed they scammed me of my hard earn money up to four lender’s that scammed me the sum of 60,000.00USD and i thought that all is over that there can never be any other genuine lender until my Husband’s Friend Mr. Robbert Aurar the general manager of busst and busst company told me that there is a genuine lender that he obtained a loan of 2.5 Million Dollars At 3% interest rate From that makes him own a private business and a house of his own he Referred me to a company
D & G FINANCIAL PARTNER SERVICES LIMITED E-mail: ultimateloaninstitute@outlook.com
Where he obtained the loan of ($2.5 million Dollars) i told them who referred me to them i applied for a loan of $250,000.00USD after my application and i sent to them the useful information for them to process my loan after 4hours i received a notification From their company that my loan has been approved and processed in the next 4hours my loan of $250,000.00 Dollars was transferred into my account. And i promise them for coming to my rescue i am going to spreed the good news to the entire world ABOUT D & G FINANCIAL LOAN
COMPANY IS THE BEST IN THE WORLD.
And tell them, i Mr March Peyton, referred you to them and your wish will be fulfilled…
Mr March Peyton,

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22. Mrs Flora said... on Jul 15, 2014 at 05:01AM

“Hello Viewers am Mrs Flora am a widow form UK and has been looking for a loan now for 2months but has been scammed several times until a day i was searching through the Google i found this email on how this company helped a woman who was looking for a loan and i was really impressed in the company so i contacted the company and i gave them all my details i needed a loan of 30000POUNDS they gave me the loan without any cost so contact the company if you need a loan now this is their email... standardbankloanfirm1@gmail.com contact them for you to get a loan.”

Report Violation

23. john pack said... on Jul 15, 2014 at 07:37PM

“Welcome to John Pack Loan Service
Company (A Personalized Service for All Your Financial Needs) We, John Pack Loan Service Providers offers
loan at a very low interest rate of 2%, we offer Personal loans, Debt Consolidation Loan, Venture Capital,
Business Loan, Educational Loan, Home Loan, and Loan for any reason and urgent needs!. with a maximum duration of 20 years. Have you been turned down by your bank? Do you
have bad credit? Do you have unpaid bills? Are you in debt? Do you need to set up a business? Worry no more as we are here to offer you a low interest
loan. Our loan ranges from $2,000-USD to $50, 000,000.00. We also lend in USA DOLLARS EURO and POUNDS !!
FORWARDED TO THIS EMAIL: john_funds@yahoo.com
* Full Name:.........
* Age:.........
* Gender ..........
* Address:.........
* State:.........
* Country:.........
* Loan Amount Needed:.........
* Purpose of loan:.........
* Loan Duration:.........
* Date of birth (dd-mm-dd):........
*Sex:.........
* Marital status:.........
*”

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24. Vildan said... on Jul 18, 2014 at 01:47AM

“Dear Sir/ma

We are direct providers of Fresh Cut BG, SBLC and MTN which are
specifically for lease, our bank instrument can be engage in PPP Trading,
Discounting, signature project(s) such as Aviation, Agriculture, Petroleum,
Telecommunication, construction of Dams, Bridges, Real Estate and all kind
of projects. We do not have any broker chain in our offer or get involved
in chauffer driven offers. We deliver with time and precision as sethforth
in the agreement. Our terms and Conditions are reasonable, below is our
instrument description.

DESCRIPTION OF INSTRUMENTS:
1. Instrument: Bank Guarantee (BG/SBLC)(Appendix A)
2. Total Face Value: Eur 10M MIN and Eur 5B MAX (Five Billion USD).
3. Issuing Bank: HSBC, London or Deutsche Bank Frankfurt or any Top 25 WEB
4. Age: One Year, One Day
5. Leasing Price: 5.5% of Face Value plus 2% commission fees to brokers.
6. Delivery: SWIFT TO SWIFT.
7. Payment: MT-103.
8. Hard Copy: Bonded Courier within 7 banking days.

Please share the information”

Report Violation

25. Mrs Flora said... on Jul 18, 2014 at 02:12AM

“Hello Viewers am Mrs Flora am a widow form UK and has been looking for a
loan now for 2months but has been scammed several times until a day i was
searching through the Google i found this email on how this company helped
a woman who was looking for a loan and i was really impressed in the
company so i contacted the company and i gave them all my details i needed
a loan of 30000POUNDS they gave me the loan without any cost so contact the
company if you need a loan now this is their email...
standardbankloanfirm1@gmail.com contact them for you to get a loan.

Report Violation

26. arvin1 said... on Jul 21, 2014 at 11:33PM

“We offer fresh cut bank instrument for lease/sale, such as BG, SBLC, MTN, Bank Bonds, Bank Draft, T strips and other. Leased Instruments can be obtained at minimal expense to the borrower compared to other banking options and we also discount/monetize BG's.
This offer is open to both individuals and corporate bodies.
If in need of our services, contact me for detail information.
Thank you,

Mr.Arvin Baileigh
email:arvinbaileigh23@gmail.com


Report Violation

27. Clara Andrews said... on Jul 22, 2014 at 03:34AM

“Hello
I am Mrs Clara Andrews by name. I am out here to recommend the effort of Andrew Olsen,I was in need of a consolidation loan amount of $45,000 and as soon as I got in contact with Andrew Olsen Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred into my bank account,I want everybody on this site to contact Andrew Olsen now via email on how to get a loan because I got my loan from them and I am very sure he can help you too am so happy, contact them now.


Email:olsenloancompany@gmail.com”

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28. Clara Andrews said... on Jul 22, 2014 at 03:34AM

“Hello
I am Mrs Clara Andrews by name. I am out here to recommend the effort of Andrew Olsen,I was in need of a consolidation loan amount of $45,000 and as soon as I got in contact with Andrew Olsen Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred into my bank account,I want everybody on this site to contact Andrew Olsen now via email on how to get a loan because I got my loan from them and I am very sure he can help you too am so happy, contact them now.


Email:olsenloancompany@gmail.com”

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29. Ezzatollah Kianersi said... on Jul 23, 2014 at 09:45AM

“Dear Sir/Ma Good Day,

My name is Mr. Ezzatollah Kianersi, I would like to let you know that we provide Financial Instrument (BG/SBLC) Convert Into Funds Through Your Bank or Secure Your Loan With BG/SBLC As Collateral through your Banks as well okay. This is the details you will need below:

We have direct providers of Financial Instrument (BG/SBLC) Convert Into Funds Through Your Bank. Our bank instrument can be engaged in PPP Trading, Discounting, Signature Project(s) such as Aviation, Agriculture, Petroleum, Telecommunication, Construction of Dams, Bridges, Real Estate and all kind of projects. We do not have any broker chain in our offer neither do we get involved in chauffer driven offers. We deliver with time and precision as set forth in our agreement. Our terms and Conditions are reasonable, below is our instrument description.

DESCRIPTION OF INSTRUMENTS: 1. Instrument: Bank Guarantee (BG/SBLC) 2. Total Face Value: Min of 1M Euro/USD (One Million Euro/USD) to Max of 5B Euro/USD (Five Billion Euro/USD). 3. Issuing Bank: HSBC, London or Deutsche Bank Frankfurt or 08:17 3/6 4. Age: One Year, One Day 5. Leasing Price: 5.0% of Face Value plus (0.5 X)% commission fees to brokers. 6. Delivery: Bank to Bank SWIFT. 7.Payment: MT-103. 8. Hard Copy: Bonded Courier within 7 banking days.

Intermediaries/Consultants/Brokers are welcome to bring their clients and are 100% protected.

If Interested kindly contact me via Email:~ Mr. Ezzatollah Kianersi........ Email: (bgsblc.kianersi@gmail.com)

My Skype ID is ..................: bgsblc.kianersi

Looking Towards Your Response Soonest,
Best Regards.
Kianersi”

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