Helvetica Hard Money

Offer Transitional Loans until Subprime Market Returns

Subprime Lending Temporarily Out of Business

Many of the largest lenders are now forced to limit their lending to what they can keep or what they can sell to Fanie Mae and Freddie Mac, the government sponsored mortgage investors who buy only loans that fit their relatively conservative standards.  Many brokers have found their subprime submissions even though approved, are "dead at the final yard."  Innovative mortgage brokers have found alternative ways to finance their borrowers despite the subprime fallout.  Private money lenders offer an attractive subprime alternative without all the extra paperwork. 

Private Money Lenders May Offer Transitional Loans

While subprime lenders shut their doors, many deserving borrowers are scrambling to access cash from equity in their properties.  Borrowers with substantial equity in their real estate still have sources of capital.  A private money lender such as Helvetica is less concerned with the borrower's credit than with the protective equity in their property securing its loan.  Borrowers in need of a quick refinance to ...

• consolidate debt,
• payoff liens,
• bailout a bankruptcy,
• avoid a foreclosure,
• market a listed property or
• get cash to transition through a turbulent mortgage market

... still have opportunities with a private money lender.  Typically private money lenders will loan up to 65% of the quick sale value on a property and sometimes more in afinity areas i.e., those areas with historically high demand and that are less affected by cyclical swings in the economy.

How to Obtain Preferred Pricing from a Hard Money Lender

Creating a strong partnership with a hard money lender can offer brokers the following rewards:

• Faster loan processing times
• Volume discounts and preferred pricing
• Cooperative marketing opportunities
• Priority call returns and support
• Personalized training, education and onsite seminars
• Joint ventures, branch licensing and correspondent lending opportunities

Hard money lenders receive large volumes of loan submissions daily from brokers often looking for a last resort to place a hard to fund loan.  A large majority of these submissions are incomplete, unrealistic or "spam" loan submissions. Making a hard money lender's loan review simple can substantially reduce the workload and increase the likelihood that a broker would be entitled to personalized attention and preferred pricing. 

Here are some easy ways to obtain favorable pricing from a hard money lender:

1. Retain High Closing Ratios:  High closing ratios means less loan fallout and lower costs per closed loan.  High closing ratios gains the respect and the confidence of a hard money lender providing for smoother and more timely fundings on future loan files.
2. Avoid Habitual Loan Shopping:  Refrain from habitual loan shopping.  Loan shopping is charaterized by submitting a single loan to multiple lenders simultaneously.  Lenders do not like to commit resources to processing loan files that have a high likelihood of being funded by a competitor. 
3. Review the Appraisal to Insure Realistic Property Values:  Reviewing the appraisal and checking comps prior to a loan submission to insure property value is accurate reduces loan fallout and increases a lenders confidence and leads to priority processing for a preferred brokers loan files. 
4. Volume Submissions: The more loans that a broker closes with a single hard money lender, the more valuable each loan file submitted is.  Brokers that close more loans often are entitled to substantial discounts and preferred pricing.    
5. Submit Complete Loan Packages: Complete loan packages reduces loan push back and reduces processing time.  A complete package includes: fully completed and accurate 1003, 1008, GFE, TIL, appraisal, preliminary title, payoff demands, purchase contract (if a purchase transaction), borrower authorization and tri-merge credit report. 
6. Use Online Submission Forms: online loan submissions reduces duplicate data entry.  If a lender offers the ability to submit loans online or has an automated underwriting engine, brokers are often incentivized to use these services as they drastically reduce data entry. 
7. Use Preferred Vendors: using the preferred vendors of a hard money lender including title, escrow and appraisal services creates efficiencies and predictability in the loan process thereby reducing costs. 
8. Review and Understand the Lender Guidelines. Brokers often submit loan files without paying attention to the lender guidelines and loan products offered.  This increases loan fallout and cost per closed loan.

And finally, inviting your hard money lender to a playoff basketball game can't hurt.

Using Cross Collateral to Get More Cashout

Using more than one property to meet your borrowers cashout refinance requirements

Using cross collateral is a frequently overlooked financing strategy for borrowers in need of more cash than the equity in a single property will allow.  Many brokers are not familiar with using more than one property to acheive a borrower's refinance objectives.  This is not common because most conventional lenders do not allow using more than one property to secure an individual loan.  The reason for this is because conventional lenders securitize their loans i.e., they pledge them to a pool of loans that is sold to the public in the form of shares.  Cross collateralization is not a common practice in the world of securities.  However, hard money lenders are not restricted by the requirements of Wall Street.  Most hard money lenders porfolio their loans i.e., they hold them and service the loans until maturity.  As a result, hard money lenders can look to more flexible and creative financing strategies than a conventional lender. 

A Cross Collateral Case Study

For example, a borrower had 3 residential investment properties with combined market value of $1,200,000 and total exising mortgage liens of $500,000.  Property 1 = $300,000, Property 2 = $400,000 and Property 3 is $500,000. The borrower needs $100,000 total cash out to payoff a large IRS lien and a judgement.  Because not one of the properties has sufficient equity to satisfy the cashout request, a traditional bank or subprime lender cannot satisfy this request.

Using all of the properties as cross-collateral, the borrower can obtain one loan for $650,000 with a single note secured by a trust deed encumbering all 3 properties.  The borrower now has one payment to make on all 3 properties and the broker has provided more than the $100,000 needed to satisfy the loan request.