All Forum Posts by: Gedaliah Fineman

Quote from @Erik Estrada:

Quote from @Gedaliah Fineman:

I'm trying to close on a commerical refi cash out bridge loan with a lender when I found the following 2 questionable clauses.

I asked the lender to remove them but he insisted that it was for the purpose of making sure that I did not lease the property to a relative for cheap and then default on it.

What do you think, is this ethical?

and also

Lender is aware that this is a commerical, non-primary property for investment purposes and yet asks me to sign a lease that disallows me from renting it out? 

What is the LTV on the bridge loan? What kind of property. What terms are they offering you?

If this is a competitive loan with a low rate, I can see why they would have strict clauses. If you are looking for a straight Hard Money Loan, There are a few that won't care if you lease it or not. 

 This loan was just a standard bridge loan.

UPDATE - They reluctantly removed the clauses in the end. I don’t think those are standard clauses for hard money lenders, though.

Quote from @Doug Smith:

Commercial lending is not as subject to the restrictions that consumer lending has, therefore, you'll see some pretty Draconian loan covenants. I assume this is for construction or rehab? I suspect they are trying to keep this from being permanent financing by making you refinance it to rent it. I'm not sure that the clauses are illegal or unethical provided they are disclosed. You can get away with a lot more as a commercial lende as opposed to a residential lender. 

This is a 12 month bridge loan so by definition you have to exit the loan.
They said they are only worried about me giving a long term lease to a friend for dirt cheap and then defaulting on the loan and leaving them with the lease. I would think there's better ways to prevent that scenario than what they're employing.

I'm trying to close on a commerical refi cash out bridge loan with a lender when I found the following 2 questionable clauses.

I asked the lender to remove them but he insisted that it was for the purpose of making sure that I did not lease the property to a relative for cheap and then default on it.

What do you think, is this ethical?

and also

Lender is aware that this is a commerical, non-primary property for investment purposes and yet asks me to sign a lease that disallows me from renting it out? 

I was informed of a new regulation requiring 12 months of seasoning in certain scenarios and wanted to find out if this would apply if the primary loan of an investment property was a hard money one. It seems to not apply to a HELOC. Please see below and thanks in advance!