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Hard Money: Private Foreclosure Loans
from:Private foreclosure loans are given out by private lenders to individuals who are in need of a foreclosure bailout loan or who might want to finance a home purchase without proper credit. If you are looking for private foreclosure loans, you might want to ask your bank or lender if they know of any “hard money” lenders. That's how they are referred to in the banking industry. The reason they are called hard money lenders is because the terms and conditions by which one obtains money from such lenders is much harder than other types of loans. Soft money, on the other hand has fewer strict conditions and more favorable terms to the borrowers.
Rates Are Higher
Hard money lenders usually charge between 12 to 20% interest, annually. This is on top of four to five origination points to close the loan, sometimes even 10 points. Since a point is 1% of the full loan amount, you are looking at some hefty upfront fees to get your hard money loan. So, why would anyone consider private foreclosure loans? There are a variety of reasons. They may not have stellar credit. They may have exhausted all other avenues of soft money. Or, they may be close to foreclosure and this is their last resort. Another reason people use private foreclosure loans is when they are investing in fixer-uppers and need capital to do the repairs. If the after market value once repairs are done is expected to be far higher, they can finance the repairs through hard money loans and thus, use none of their own capital to get the work done.
How Private Foreclosure Loans Work
Once a hard money lender agrees to do private foreclosure loans for a customer, they will have to pay the points and agree to the strict terms of the loan. This can help the borrower buy time to sell the house and recoup some equity or stave off foreclosure proceedings. They will typically only do deals for private foreclosure loans with a loan to value ratio between 65 and 75%. So, if you are upside-down on the mortgage and the value of the home can't support a loan, it won't qualify for a hard money loan either. If, however, your market value hasn't slid too much, you can use the loan to finance time to sell the house and recoup your equity. In comparison, if you go into foreclosure, you will lose all your equity, so paying significant fees to become current on the loan can pay off in the end. The lender does make a lot of money on these types of loans, but they also are free to give the money based on their conditions and risk assessment.
Home Loans Foreclosure Specific links
Home Loans Foreclosure News
Faulty loans, foreclosures cost $72 billion - Detroit Free Press
 BBC News | Faulty loans, foreclosures cost $72 billion Detroit Free Press The mounting costs are pushing lenders and regulators to resolve investigations and lawsuits over faulty home lending, including a 50-state review of foreclosures. The wrangling over the status of old loans has made some banks more reluctant to make ... A Glimpse at Four Key Players in the Settlement Attorney General announces major lawsuit 5 Booming Bank Stocks Poised to Fall |
US, Banks Agree on Foreclosure Pact - Wall Street Journal
 Bloomberg | US, Banks Agree on Foreclosure Pact Wall Street Journal The agreement is the latest government effort to ease housing-market problems that have plagued the economy for the past five years. Nearly 1.9 million homes have gone through foreclosure in the past two years, but just as many loans are in some stage ... Illinois homeowners could get $1B in 'robo-signing' settlement Foreclosure Deal Said to Offer $17 Billion in Mortgage Aid 5 banks in $26B settlement with feds over abuses |
Iowa's unlikely duo working to save American homes - DesMoinesRegister.com
Iowa's unlikely duo working to save American homes DesMoinesRegister.com A new set of standards for loan servicing and foreclosure. The five largest banks that service mortgages would be released from legal claims on past home loan servicing and foreclosures. The deal would not prohibit individuals from suing the banks, ... |
Home foreclosures decline, but completions rise - CBS News
 Bloomberg | Home foreclosures decline, but completions rise CBS News According to CoreLogic's latest national foreclosure report, released Wednesday, the number of loans in foreclosure inventory decreased 8.4 percent year-over-year in December 2011, and fell from 57000 to 55000 loans from November to December. Banks See Paying Bonus to Troubled Homeowners Beats Foreclosure: Mortgages 830000 U.S. Home Foreclosures Completed in 2011, Down 24% From 2010 Homes in foreclosure decline by 130000 |
More US states to join foreclosure-abuse deal - Wall Street Journal
 FCIR | More US states to join foreclosure-abuse deal Wall Street Journal The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth. The lenders would also send checks for about $2000 to hundreds of thousands of people who lost homes to foreclosure. US mortgage deal moves forward More than 40 states agree to foreclosure deal Action at Last on Foreclosure Fraud? |