Why aren't HMLs allowing seller's equity as down payment?

[Rodney Dixon]

I'm currently working on a income producing quadplex deal in Tampa, FL in which I've convinced the seller to carryback 40% of the purchase price. I contacted 2 guys who lend hard money in my market whom through past discussions have stated that they lend up to 70% of the purchase price. When I ran the deal by them and how I was mapping to pull it ofl w/the hm 1st for 70%, have the seller sign a contract to carryback 40% and the difference between the 60% in hard money funds that the seller was actually going to receive and the 70% that the hml was actually funding, I was going to pay all the deal costs(closing fees, points, etc..). 

However, neither guy didn't want to do the deal insisting that I need "skin" in the game. 

So now I'm seeking insight as to why HMLs refuse to allow these creatively structured deals to be deployed?

[Jason Hirko]

I had a good client ask me the same thing last night on a flip he wanted to do. The purchase price was $150k, rehab $50k, and ARV was $300k. I told him I'd lend him $180k (90% of purchase and rehab) but he needed the difference. He asked if the owner could hold back the $20k from the sales price, and for the same reasons already mentioned, I had to say sorry, but no. We kept discussing it, and came up with the following solution from him. My client and the seller set up a joint venture, they both co-sign on a loan, I'll lend the $50k in rehab (I'll do 100% because the seller is pledging the house as collateral), then when it sells, the loan gets paid off, the seller gets his $150k for the house, and then they split the profits equally. That's how a lender can get creative and still be able to stay in business.