Hard Money Lender Prohibits 2nd Mortgage Position

[Colby Burt]

Hi!

A friend is doing a BRRR to STR. Most of his money is coming from a hard money loan. The remaining amount is coming from myself, as a private loan. Her plan is to do a cash out refi and pay back the hard money loan and my loan.

Hard Money Loan is in 1st lien position. I asked to be in second lien position. Her hard money lender said they won’t allow anyone else to be on the mortgage as it is prohibited in the Hard Money Lender’s rules/policies. 

Currently, I'd only be signing a JV agreement. But If I don't sign a mortgage with my borrower, I don't have any security in the event of a default.

Only thing I could do to have some sort of security is have her personally guarantee my loan which would allow me to foreclose on her personally/pursue her assets (including wage garnishment) in the event of default, right?