Hard Money Loans

Dallas, TX, United States (AHN) – U.S. State District Judge Bruce Priddy allowed two groups of investors to claim $115 million against former Canadian developer Eric Brauss.

Judge Priddy allowed the U.S. investors to claim $65.3 million against Brauss and the Nixdorfs $49.5 million.

Brauss owned the Windsor Speedway and Today Management and then left Windsor in 1990 for Dallas.

His Canadian companies developed 60 plaza, strip malls and office buildings in Ontario. His business in Texas prospered so much that by 2008, Brauss’ net worth reached $28 million.

However, reports said Brauss – who originally is from Germany – fled to Brazil in 2009 after he was accused of diverting millions from his company’s real estate projects into his personal accounts or other firms he owned.

Despite the large amount of claim Priddy allowed, the investors may not be able to wholly collect their money because only a fraction of Brauss’ partnerships have much value, the receiver overseeing Brauss’ companies said.

Brauss’ lawyer admitted his client – who also reportedly owes $750,000 to different Las Vegas casinos – will no longer return to the U.S., but maintained the developer left with his personal money only.

Earlier this year, Dallas resident Doug Barnes got a $35 million judgment against Brauss. Barnes, owner of a national chain of eyewear stores, was the largest individual investor in the real estate developer.

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One of the best scenarios for commercial hard money loans is when the borrower has an opportunity that he knows he will make a substantial amount of money on, needs to move on it immediately, and regardless of the fees the hard money lender charges. With this scenario the profit the borrower will make will easily offset the fees the borrower has to pay to the commercial hard money lender.

Commercial Hard Money Loan – Scenario 1

For example, we have recently worked with a borrower that had an opportunity to purchase a fleet of trucks for his business at a 50% discount. Total purchase price on the trucks was just over a million dollars with a value over $2,000,000. On the commercial hard money loan the borrower had to pay 3% in fees in order to get the loan or $30,000, to be able to save over a $1,000,000 of needed trucks for his business. He collateralizes the commercial hard money loan with his building and was able to close in 3 weeks. So $30,000 in fees to save over a $1,000,000…

Commercial Hard Money Loan – Scenario 2

Another similar example is when a borrower wants to purchase a property from a distressed seller at a substantial discount. Typically the seller can’t wait 60 to 90 days to close a conventional commercial real estate loan and instead needs to close in a few weeks or will not offer the discount.

So say the property is really worth $2,000,000 but the seller has agreed to $1,500,000 a $500,000 discount. The buyer would get a commercial hard money loan at 60% of the purchase price or a loan amount of $900,000 and pay say 5% or $45,000 in fees to the commercial hard money lender. So the borrower would save $455,000 by taking advantage of the opportunity. In this case most borrower wouldn’t care (at least that much) about paying the commercial hard money lender their points because of the amount of money they make off the deal.

In general these type of scenario are much easier to close than the bankruptcy/company turn around/debt consolidation type situation. Many commercial hard money lenders no longer look at deals like this.

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or Commercial Hard Money Loans

Author: Jeff Rauth
Article Source: EzineArticles.com
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For anyone seeking residential hard money loans, time is of the essence. The major reason that people seek this kind of unconventional financing is because banks simply take too long, or they are unable to meet the increasingly strict criteria that the lending institutions put forth.

There is some confusion over what the money can be used for. One reason for the confusion is that lenders and brokers use different terminology. In some cases, they mean to confuse the borrower. In others, they simply forget that everyone is not as “savvy” as they are. Below, you will find some common terms used by financers and what those terms usually mean.

Acquisition loans are hard money home loans used to purchase a property. The amount available will vary depending on the lender. It is usually a percentage of the appraised value. Commercial banks typically require that you have around 20% of the purchase price. Else, they will charge a higher interest rate. Private lenders may be able to finance the entire amount and the closing costs are usually lower.

Construction loans may be used to build a residence, but they can also be used for repairs, expansions or upgrades. Current homeowners or real estate investors may be interested in these types of hard money home loans. Conventional lenders typically require that the property in question is or will be your main residence before they will approve financing. Private lenders are usually more flexible.

Mezzanine loans typically refer to residential hard money loans that are similar to second mortgages, but the term may also be used to refer to specific kinds of business loans. Mezzanine loans are short term, typically three years or less. The funds may be used for a variety of reasons, including “buying out” a business partner. The amount that you can borrow depends on the resale value of your home or business, minus the amount of other outstanding loans, such as a first mortgage, in other words, the amount of equity that you have.

Asset based hard money home loans may be used for any purpose, as long as you have collateral or assets to “put up”. Conventional lenders refer to them as secured loans. The primary difference is the time that it takes to complete the loan, but there may be other differences. If you have collateral, private lenders may not be as concerned by your credit score. For conventional lenders, a less than perfect credit score may end up costing you thousands of dollars more, because of higher interest rates, if they will approve the loan at all.

Bridge loans fill in the gap when permanent financing solutions are in the works, but the actual purchase needs to be completed quickly. Bridges may be commercial or residential hard money loans. The funds can be used for practically anything. Depending on the lender, there may be no limit to the amount you can borrow. The funds are made available to you quickly. But, bridge loans are very short term solutions, typically not more than 6-24 months. So, you need to know where your long term financing is coming from.

Both private and commercial lenders might use other terms that you do not understand. The best advice: When you do not understand, ask for clarification. As mentioned above, some lenders simply forget that everyone is not familiar with the “lingo”. If a lender is unwilling to explain something to you fully, then you should probably seek another source for your residential hard money loans.

James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Guide, a comprehensive resource for those looking to secure funding for real estate projects.

Author: James Whitmore
Article Source: EzineArticles.com
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In the times of financial uncertainties banks, financial institutions and money lenders are facing the rise in the cases of credit default. If the loan amount is not secured against some kind of assets then these people suffer heavy losses because they have nothing to bank upon in case of credit default. Under the secured loan borrower uses his/her fix or other movable assets as collateral in order to secure the amount taken as a loan. Lenders feel more at ease under this segment of loans as the money given to the borrower in the form of loan is on the safer side as the loan amount is secured against the collateral which can be repossessed by the money lender in case of credit default by the borrower. The market value of your property decides how much money you can avail as a loan by putting it as collateral. Also, your ability to repay the loan and your overall financial situation will be important deciding factors.

You need to remember one thing that no matter which loan you are taking there are only two categories – secured loan and unsecured loan. When you compare secured and unsecured loans you will come to know that there are basically three differences – the extent of amount which can be borrowed, the repayment tenure and the interest rate. Best secured loans come with lower rate of interest and extended repayment tenure as lenders are quite sure of getting their money back as all forms of secured loans like; Secured homeowner loans, loan against gold, car logbook loans etc; are backed by some kind of security and in the case of credit default lender can claim his/her money by repossessing or reselling these assets.

On the other hand, the situation is quite different in the category of unsecured loans, where interest rates are, generally, higher and repayment duration is quite small comparatively as there is higher degree of vulnerability hovering over the loan amount. In order to avail cheapest secured loans, borrower can bargain hard with the lender in order to avail a tailor made loan deal and most of the lenders will have to come to your terms as there is cut throat competition in the secured loan market.

Low rate secured loans can be availed by doing comparison of different loan deals available at various price comparison websites.

Mortgage originators priced 14 percent fewer loans based on the latest Mortech-Mortgage Daily Mortgage Market Index . Also lower for the second week was the average U.S. loan amount. The refinance share additionally fell for the second consecutive week to 54 percent.

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Are you in emergency and thinking about from where money will come? Don’t be unnerved, you can go for the short term payday loans. These loans are designed with the objective of short term requirements. You can’t use these loans with the objectives of long term. There are many options for you in the market. Terms, rate of interest also vary from lender to lender. You should search the market thoroughly, you will definitely find a cheap loan for you. These loans have nothing to do with the past credit history of a borrower. If you have regular monthly income then these loans are not that much difficult to get. Lenders are trying hard to tap the potential short term profitable market. These loans are generally comes at a higher interest rate. But they surely help you while you are in money problem.

Generally these Payday loans are processed through the internet so very fast. You can get a loan amount in your account within an hour of application. You can also use these loan amount in any purposes. You can use these loans to shopping or if your paycheck is late and you need to do payment of something then you can think of these loans. Though these loans are basically aimed at salaried people and to fulfill the requirements of the gap period between the two paychecks. These loans are not specified for anything. You can also take it to medical treatments.

The banking technology has evolved beyond our imaginations. You can now avail the services of banks from your bed room. Almost all the lenders are providing the on line facilities. The on line banking is not only convenient but also less time consuming. You can apply for the loan with out paper works and taking a leave from office. For more information you can go to the websites of the bank. There are many lenders in the UK market providing loans in a lucrative terms, find out the best one.

The inspector general of the U.S. Department of Housing and Urban Development has issued a letter to Sen. Charles Grassley questioning the low amount of a Department of Justice settlement with Beazer Homes. The settlement was tied to alleged fraud at the company’s defunct mortgage unit on federally insured mortgages. The inspector general claims that, given the losses, the amount of the settlement was not enough.

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Hard money loans are the amount being borrowed to solve some urgent financial problems. The term hard signifies it’s quite Herculean to obtain because these loans are not provided by banks or financial institutions rather they are disbursed by private financial groups or lenders known as hard moneylenders. Hard can also be interpreted in different manner as there is high upfront cost involved and exorbitant interest rates are being charged. These loans also have high origination fees and cost more than an average mortgage (in some cases going as high as twice that of average mortgage).

Hard money loan is generally explored as the last resort. It should be understood like if one is willing to sale his/her business venture or the property and he/she thinks with a little bit of renovation and repairs the money generated can be quite high then hard money loans can be the best suited option for him/her. All he needs to do is to obtain the loan utilize it make some extra money and return it.

The uniqueness of hard money loans lie in their various characteristics like they have private lending sources. They come with short interest term of one to three years they charge upfront fee on closing before three months of the due date that is quite astronomical. There is limited number of debt covenants and they are shorter in duration. Moreover the failure in repayments results in the sale of the assets to nullify the debt.

Hard money comes in forms like hard money business loans or residential hard money loans. The hard money loans are usually secured by real estates of commercial viability. Hard money borrowers get the fund based on the estimated value of the commercial or residential real estate. The lenders are interested in money generating properties such as apartments, shopping malls, office buildings, hotels, hospitals and so on. However potent income generating activities like land acquisitions, bankruptcies are also seen with interest.

People who have been turned down the mortgages by the financial institutions because of various reasons like having a poor credit history, non competence to pay as they lack in desired income etc. also look upon the hard money loans as their saviors. Hard money loans are also sought by persons who are falling behind the repayments of their mortgage or fear the foreclosures.

The investors are lured by the typically high return on their amount which banks fail to provide them. So investing in hard money loans to borrowers having equity of 30-40% in the property seems to be a better proposition to them. These loans are given on the appraised value of the commercial property unlike traditional bank criteria which seek too many documented proofs like credit card scores, tax returns and income statement of the borrowers. Lesser paper work and lesser verifications make the procedure to obtain these loans very brisk.

Author: Steve A Clark
Article Source: EzineArticles.com
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Hard money loans are specialty loan products, only taken on by investors who are willing to invest in high risk loans.

The loan to value ratios are low, the interest rates are higher, the points or fees are typically much larger than other mortgage loans, and these types of loans are often due and payable sooner.

Natalia Osorio Editor of the “Loan Modification Foreclosure” website — http://www.LoanModificationForeclosures.com — pointed out;

“…The financing criteria for a hard money loan is often based exclusively on the value of the collateral which is the property being financed, and no or very little consideration is given to a borrower’s credit. This means that even a person in foreclosure whose credit and credit score has severely declined can qualify for this type of loan if there is a sufficient amount of equity in their property that reduces the investor’s risk. The loan to value is 65% or less. This means that if your home has a value of $350,000, the maximum loan amount would be $227,500 which is 65% of $350,000. Hard money lenders really prefer making loans on properties with a loan to value of 50% or less…”

Interest rates on hard money loan to stop foreclosure immediately will be substantially higher than other mortgage loans, often 12% or even greater. Often they are interest only loans so that none of the payments apply to the principle.

In addition, a hard money loan will charge the borrower the maximum amount of points allowed under mortgage law regulations. So expect to pay at least six points or six percent of the loan amount to acquire this financing. Usually the six points plus all other closing costs are included in the total amount of the loan, so you will need some wiggle room in the value of your collateral to cover the loan closing costs as well.

These loans are often amortized over 30 years, but are due and payable within eighteen months to five years.

“…In addition, if you own other property, you are an especially good candidate for a hard money loan to stop foreclosure immediately because these lenders are open to cross collateralizing your other property. This means that other properties of yours would be encumbered in the hard money loan as well…” N. Osorio added.

Because of the small number of qualifying features, as well as the independent nature of these investors, hard money loans can close very quickly and can be excellent to stop a foreclosure.

Further information about how to get professional assistance with a mortgage loan modification by http://www.LoanModificationForeclosures.com

When you need funding urgently but you can’t wait for weeks to search lenders for traditional loans, you can opt for Hard Money Loan.

A hard money loan is a type of borrowing in which a borrower receives loans based on the value of a specific parcel of commercial real estate. This means a loan where the lender approves the loan request by deciding upon the value of and equity in the assets, without spending considerable time traditional lenders spend on documentation and verification of borrower for the same amount of loan. The most important issue in case of hard money loan is that this loan involves much higher interest rate than other categories of loans.

Key Features of Hard Money Loan

While in traditional loans a lender spends considerable amount of money and time on verifying borrower’s credentials, his income, source of income, tax history, credit history etc, in case of hard money loan, lenders avoid the above procedure because the loan amount in hard money loan is based upon the value of the real assets or collateral anchoring the loan, therefore, hard money loan is provided at the least possible time. Hard money loans are also those loans that need to fund quickly and the borrower cannot afford to wait for weeks or months for a traditional lender.

Hard Money Loans: Key Factors

1 Fastest Processing

2 Not linked with borrowers’ credit record, income level, source etc.

3 Can be borrowed even in case of legal & operation issues

4 TERMS: Flexible loan terms between 6 months and 20 yrs

5 LOAN SIZE: £500,000 to £75 million

6 COLLATERAL: Real estate and other fixed or liquid assets

7 Special Situation Financing Structure offered for all type of commercial or residential real estate development that cannot be funded by the more traditional lender

Loan Structure

A hard money loan is provided when the related real estate is offered as collateral and the amount of loan is based on the quick-sale value of the property against which the loan is made. Normally, most lenders fund in the 1st-lien position, meaning that in the event of a default, they are the first creditor to receive remuneration.

The loan amount in case of hard money loan is decided as the a percentage of the quick-sale value of the subjected property. This percentage is called the Loan-to-Value or LTV ratio and typically fluctuates between 60-70% of the value of the property. Value, in this case is determined as ‘today’s purchase price’ This the amount that a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a 1-4 months’ time.Therefore, based on the above, a hard money lender, may structure a loan as follows:

68% Hard Money Loan

18% Borrower equity (cash or additional collateralized real estate)

14% Seller carry back loan or other subordinated (mezzanine) loan

Eligibility: Are you eligible for Hard Money Loan?
It has been seen that hard money loan is ideal for borrowers who are unable to borrow from traditional source. Such borrowers are often surrounded by legal & operational issues. In such cases, hard money loan providers solve the problems and get the property suitable for borrowing from traditional lenders. Though the type of property to be considered as collateral depends upon the lender, normally the following income producing and non-income producing properties are considered suitable for collateral:

Income producing Properties:

Apartments

condo/co-op conversions

retail/shopping/strip centers

mixed use properties

industrial, office buildings

hotels/motels

medical, mobile home parks and restaurants

Non-income producing properties:

land acquisition

development and construction

bank workouts, foreclosures and bankruptcies.

LOAN Amount and Interest Rate

Loan size varies from lender to lender but the normal range is £500,000 to £75 million on different categories of properties. Repayment duration is normally in between 6 months to 20 years. Interest rate is based on various factors such as loan amount, repayment duration, risks involved etc but usually remains in the range of 10%-13% with a low fees starting at 2%.

At time, there are few lenders who provide upto 100% loan but very rarely. Typically for a hard money residential loan, borrower’s 15% equity in land or liquid assets is taken as sufficient collateral. Similarly, in case of commercial property 25% equity is usually taken as sufficient security.

Loan Processing

Processing documents for hard money loan is easier and fast compared to documentation for other categories of loans. One can fill out the online application form from the website of different lenders or can phone these lenders’ representatives who provide fast service on call.

Author: Steve A Clark
Article Source: EzineArticles.com
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