Hard money lenders Halting their activity. Does it make sense?

[David Serna]

A couple of the bigger HM lenders that took care of my clients in the past are now pulling out of the game and re-assessing their loans. Some of them even mentioned that they might even raise rates to as high as 14% (before, most of them did the standard 12%) in these troubled times which to me doesn't make sense at all. It makes sense to me gauging it from a business standpoint because, obviously, you want to hedge against risk so you start charging a little more; but even then, I feel it might be a little counterproductive. Although this is the case, would it make sense to raise rates when investors are a little more skeptical, at least right now more than any other time in the past few years?

Maybe some of the Hard money lenders that do business in San Antonio, TX can attest to this and give me their opinions. I'm genuinely intrigued. I'm a Wholesaler/Realtor in the San Antonio, TX market and we're putting a lot of deals out to our investors still, and because a lot of them use HM I want to see what other people are thinking about the subject. Any opinion is appreciated thank you.

[Joe Cassandra]

It's not necessarily always they're afraid of the market (although for some that's the case). 

It likely goes back to the source of the funds they access.

- If they own a bunch of homes and are lending from their HELOC...they don't want to be called on a bunch of those if price values plummet

- If they borrow from another lender at a lower rate (even the 0% fed rate) with collateral tied to other assets...say the stock market...that's taken a hit, so they can borrow less. 

- If they have actual private lenders...which they claim they all do, but you'd be surprised how many don't...their private lenders may be going to cash and pulling their money

Yes, they need to lend money to stay in business...but if they themselves are getting squeezed, it'll come back to us investors