All Forum Posts by: Mark Safrin

I don't know about industry standard but we loan out 30 year fixed, fully amortized HML loans all the time. (Real 30 years, not balloon). What is not so common in the HML world is the very low loan amount you borrowed.

Risk Management. If I give you money, what is to stop you from taking off and living the good life in the Bahamas or gambling it away at your favorite casino? As hard money lenders your loan from us is guaranteed by a first position lien on the property in question. If we, or whoever holds the note, have to foreclose on the property we want to make sure there is plenty of equity in the property for us to recoup our money. Included in that is the costs and hassles of foreclosing and what happens if there is a market downturn and we end up with a property worth less than the mortgage?

The main issue that I see is that you were told this only a day before closing. Sounds like either closing was arranged too close to the appraisal report date or the report was delayed or someone was sitting on this info. 

Every lender has their risk tolerances and comfort zones. If your loan request doesn't meet their criteria then thank them and move on. If multiple lenders refuse to lend to you then perhaps contemplate the remote idea that perhaps the issue, if there is an issue, is not at the lenders end.

Lenders have sweet spots for where they like to lend. They might have investors with preferences on where their capital is lent or outside loan clearing houses with rules and requirements. 

Most of all, lenders don't owe you money. It is theirs to lend if they so feel inclined. In fact the market is so hot right now that any lender not super busy should consider their business model.

If you have a property that falls through the lending cracks, consider approaching a good loan broker that can shop around amongst lenders for you. 

Best of luck.

Cameron's advise seem worth reading more than once.

In some other threads I have mentioned a comps nightmare we had in Louisiana recently where 15 appraisers refused to appraise a triplex because of no comps. The 16th was able to appraise and it is a work of art I should probably frame and hang on my wall. It was beautifully done and the work of a true professional. He indeed found comps and explained why they were used.

It seems logical, especially at the newbie stage and especially given the comps uncertainty, that when you calculate your numbers you include plenty of padding in your estimates. For rehab cost and time over-runs, for selling time over-runs (including more loan repayments) and for selling price surprises. 

Best of luck.

Sometimes less but yes.

Lender points and fees, appraisal, title costs, insurance. 

Cheer up. We are involved in a 3 property, $30 million commercial property loan and the upfront underwriting deposit alone is 3x $5k before anything else kicks in.

So if I have this right, you did not leave reserves to service the loan for a few months in case selling it took longer than expected.

Do you have any refi options to a lower interest rate that does not involve prepayment penalties?

(Thanks @Stephanie P.)

We are in Chicago and always happy to chat. (You are welcome to visit us in person too). 

If you are referring to pre-approval letters, we can provide this if the seller desires this. Note that a pr-approval letter is not a commitment to lend, but hey, if the seller wants it for some reason we can provide it.

Cheers

Argggh. I see above my post came out unintentionally wrong. I was actually trying to say be ethical and play by the rules and that HML was not for this situation. Going to have to phrase things better in future. Sigh.

Have not had business dealings with them though some of my clients have. Suggest you make sure their length of time to close fits in with your needs.

Cheers. 

If you are planning to live in it then a HML is probably not going to be allowed. Of course you can always neglect to mention it to the HML when you apply for the loan. I guess it depends how ethical you are in playing by the rules.