All Forum Posts by: Corey Dutton

Further, take a look at Germany and the U.K.. Home ownership there is not a RIGHT like it is in the U.S. You have to have 30% down to buy a home in Germany. That's how it should be in the U.S.A. Period. Everyone rents in Germany. If you don't have the down payment, you can't afford to buy a house. All of this propaganda from Clinton and Bush Administrations, "everyone should own their own home," is the propaganda that led to the worst recession in U.S. history. We should start following the lead of countries like Germany that don't view private property ownership as a RIGHT. It's a privilege Lynn, not a RIGHT. 

So having 2 months of pay stubs is a good loan? That's all it takes. You have to have the right income, but you just need 2 months of pay stubs to get a loan. 

I agree that the stated income loans caused this problem but here's an example. My husband's worker makes $12.00. He just switched jobs 2 months ago and is with a new company. He just bought a townhome with 3.5% down and he just switched jobs. What is the guaranty that he will stay at that job or get fired a week after he closes on the house. This is not a safe loan. Thank heavens for MIP. Government backed loans are the highest risk on the planet. No one else will risk doing the deal but send it to Fannie and Freddie baby they'll do it! Why not? Our tax dollars will be bailing it out.

With only a 3.5% down payment and a 580 minimum credit score requirement, many critics believe FHA loans are encouraging another crisis. In the U.K. and in Germany for example, home ownership is only for those who can afford to bring in 25-30% down towards the purchase. In other words, home ownership is for the privileged few. So why in the U.S. is home ownership given to everyone has nearly a right? Both the Clinton and Bush Administrations pushed heavy propaganda leading up to the crisis with slogans like, "Every American should be

able to own their own home.” Well, we all know what that propaganda created, the worst recession since the Great Depression in the U.S.

With the highest default rate in the sub 600 credit score category, some FHA lenders are pushing this requirement of 580 up to over 600. But with such low down payment requirements, what would prevent these borrowers from walking away when times get tough? In my opinion, nothing will prevent them from walking away if the market crashes again with such low down payment requirements. What is there to lose?

Posted by Corey Curwick Dutton, Hard Money Lender

With only a 3.5% down payment and a 580 minimum credit score requirement,

many critics believe FHA loans are encouraging another crisis. In the U.K. and in

Germany for example, home ownership is only for those who can afford to bring

in 25-30% down towards the purchase. In other words, home ownership is for

the privileged few. So why in the U.S. is home ownership given to everyone has

nearly a right? Both the Clinton and Bush Administrations pushed heavy

propaganda leading up to the crisis with slogans like, “Every American should be

able to own their own home.” Well, we all know what that propaganda created,

the worst recession since the Great Depression in the U.S.

With the highest default rate in the sub 600 credit score category, some FHA

lenders are pushing this requirement of 580 up to over 600. But with such low

down payment requirements, what would prevent these borrowers from

walking away when times get tough? In my opinion, nothing will prevent them

from walking away if the market crashes again with such low down payment

requirements. What is there to lose?

Posted by Corey Curwick Dutton, Hard Money Lender

Hard money lenders have earned a bad reputation in the area of lending for no good reason. In fact, they are often grouped into the same category as pay day lenders. Pay day lenders hold a larger share of the consumer lending market in places like Europe, as compared with the U.S. The United Kingdom recently launched an all out assault against pay day lenders, setting caps on interest rates that they are able to charge consumers on short-term loans. This government action against pay day lenders in the U.K. has eliminated most of the players in the market. But hard money lenders, particularly those that lend on real property such as real estate, are distinctly different from pay day lenders. In fact, hard money lenders fall into a completely separate category than pay day lenders. So why then, have hard money lenders earned such a bad reputation?

Because the general public barely understands consumer loans such as auto loans and mortgage loans, hard money loans are quite a foreign topic for most. There are two primary reasons that hard money lenders have such negative associations. Because hard money has not been standardized like traditional mortgage lending, there is a wide difference between one lender and another when it comes to service standards. The negative customer service experiences many borrowers have had in hard money, is often due to the lack of standardization in the industry.

Borrowers searching for hard money loans often encounter predators or upfront fee loan scams rather than legitimate hard money lenders. The lack of regulation in the area of hard money has opened it up to con artists and predators, another reason hard money has earned such a bad rep. What are some other reasons that you would add to this discussion for why hard money has earned a bad reputation?

Posted by Corey Curwick Dutton, Hard Money Lender

The article on Scotsman Guide is super informative in terms of what warning signs to look for, etc. It seems obvious to those who working mortgage lending and financial services, but for those with no experience, they may as well be in the shark tank. 

Never trust hard money lender lists, any association that requires upfront dues, and others such as REIClub.com, that also has a "pay to play" list of hard money lenders. These are all bogus because most of the lenders on these lists are just upfront fee collectors (e.g. hard money upfront fee loan scams). There's no way to filter these lists, as people just pay money to be listed on there. This is not to say that some of the lenders are legit that are listed, but BEWARE, most are just scam artists looking for easy prey, promising 100% financing on your first rehab deal. Please....

From a fall article in the Scotsman Guide, the popular topic of loans scams in hard money is a conflictive one, particular for those who have been the victim of one. Loan scams are a huge problem in hard money loans for many reasons, too many to outline here in this discussion. What are the top 3 scams found in the arena of bridge lending?

First of all, a hard money loan, is any non-bank loan, whether it be a private individual, an organized fund, a mortgage pool, mortgage broker, etc. Loans scams in this financing niche are a problem, as I said, and the top 3 scams found most prevalently include:

1.Fees paid prior to closing a loan: Also called upfront fees, there are a lot of fake lenders who pretend to be funding loans but instead are having borrowers pay upfront fees. Ever seen the movie, ‘American Hustle?’ This is an example of an upfront fee loan scam.

2.Identity theft: This is another common loan scam whereby a group or individual will gather personal identifying information from a borrower, in order to steal his or her identity.

3.Bait and Switch: In this scam a legitimate lender provides terms to a borrower but then changes the loan terms right before closing.

To learn how to avoid the most common scams in hard money lending, read the entire article on Scotsman Guide at the link below.

What other scams are you seeing in hard money these days? Please share your insights below and comment on this discussion.

(Article Source: http://www.scotsmanguide.com/Commercial/Articles/2014/09/Avoid-Bridge-Lending-Traps/)

From Trulia’s Bubble Watch article from January 2015, it’s no wonder that California’s hard money lenders are now requiring appraisals prior to funding properties. But why? According to Trulia’s Bubble Watch, California and Texas were identified as the top two markets in the U.S. where home prices are most overvalued. Trulia’s valuation measurements comes from looking at prices compared with the historical norm in each market.

Real estate investors in California that rely on hard money lenders to finance their new purchases and refinances have been hitting the appraisal hurdle pretty hard. And for good reason, since many of our affiliated lenders in California have been complaining that appraisals aren’t coming back where they should and thus, borrowers are walking away from these transactions. The good news, according to this report, is that home prices are healthier now than at any other point in the real estate recovery. Another bit of good news? Take a look at the top ten metros in the U.S. that are undervalued. This list presents new markets for real estate investors in California or Texas to consider investing in.

(Article Source: http://www.trulia.com/trends/category/bubble-watch/)

Posted by Corey Curwick Dutton, Hard Money Lender

Sounds like they are having some challenges. One of the problems they are having is closing branches in rural areas. The CFO describes a number of branches in small towns where the nearest other branch is 20 or 30 miles away. “This branch may only see 5,000 or 6,000 transactions a month, compared to 20,000 or 30,000 in a city branch in Milwaukee. If we close that branch, how many customers do we keep? I would say we only retain 50% to 60% of them.”