Hard Money Loans No Longer Available to Consumers

[Corey Dutton]

The Dodd-Frank and the Consumer Protection Act have made it virtually impossible for a consumer to obtain a hard money or private money loan anymore. In the wake of the financial crisis, many consumers have had hits to their credit scores and can no longer qualify for a bank loan. In the past, when one could not qualify at the bank, one could still turn to a private or hard money lender for a loan. Not anymore!

The new Act has placed new restrictions on non-bank lending that did not exist before the financial crisis. The majority of hard money and private money lenders will no longer lend on owner occupied properties, for fear of regulators coming down on them. Ironically enough, it was the BANKS and not private money lenders who created this financial mess. Yet, it’s the non-bank, private and hard money lenders who are now being regulated.

In an effort to “protect” consumers, this new regulation is in fact “hurting” them even more by regulating the non-bank lenders. For example, a homeowner who needs to refinance and can’t qualify at the bank, is now unable to obtain a loan from a hard money lender. Equally, a homeowner who can’t qualify for a purchase loan at the bank also cannot obtain a private money loan.

What are your thoughts on this topic?

[Ann Bellamy]

Unintended consequences. In an effort to protect the consumer, they took away all the consumers' choices.

So all the self employed who can't qualify for bank loans anymore can't buy a house because the government is protecting them.

Now that's really helping the real estate recovery, isn't it?