FHA Lending Shutdown Poses Future Opps for Hard Money Lenders

[Corey Dutton]

The government shutdown, the proverbial “psyche!” by legislators, certainly caused a stir among private money and hard money lenders. With so many government-backed loans in limbo, many borrowers made a last ditch effort to fund their deals with private money financing. With the speed and ease typical with hard money loans, a real estate investor who stood to lose earnest money or worse the property, ran to bridge lenders.

For me, the government shutdown really opened up my eyes to the possibilities for private companies to take over areas of the public sector. In Utah for example, the Parks were shut down and our State lost millions from the loss in tourism. Why shouldn’t private companies and non-profit organizations own and operate the Parks? I think it was government’s job to stake it out and protect these lands, but why can’t the Parks be operated by private organizations? If a non-profit were running the Parks, the government shutdown would not have affected the State in such a traumatic way.

The same with the slowdown in the real estate market caused by the government shutdown. I see more opportunities in private money lending and specifically, trust deed investing, as government backed financing may be wishy washy in the next couple of years. For example, FHA's pledge to downsize it's multifamily loan programs in 2014 will surely will open up more opportunities in private sector lending. How could we make it work with private sector takeovers of traditionally public sector markets if we had to, such as in the example of the Parks? Please comment.