Hard Money – Foreclosure Bailout

What is Hard Money foreclosure bailout?

In cases where a loanee defaults a loan taken from a bank or any other financial institute, the lending party will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount.

Lets consider a case where the loanee has paid 70% of the loan amount. And due to the inability for a short period ends up as a defaultee, will not what the property to be autioned, in such a situation the loanee resorts to take fore closure bailout loan from a hard money lender. This way the loanee can buy in some time to adjust the money.

Georgia Hard Money – Foreclosure Lenders

There are many hard money lenders who provide foreclosure bailout (Hard Money Loans). Allied Mortgage & Financial Corporation (AMFC)  is one such direct hard money lender. AMFC’s residential mortgage division specializes in residential mortgage loans for a wide variety of property types like apartment buildings, farm house, 2-4units, condos, etc. AMFC specializes in helping borrowers with special needs, by offering greater flexibility in structure or documentation requirements. Focusing heavily on providing an extremely customer-centric environment with rapid turn around times and increased flexibility, AMFC has met the needs of mortgage professionals and borrowers for more than 20 years.

Here is a list of some more Georgia hard money lenders Gala Resources LLC, First Mount Vernon, Allied Mortgage & Financial Corporation, Aztec Financial.

Equity Max Inc

Hard Money Mortgages

What is a hard money mortgage?

A mortgage is an instrument used by hard money lenders to provide hard money loans under which property on which the loan is being raised will be used as security of the hard money loan. Mortgage in itself is not a liability. It’s the lender’s security for a debt. Mortgage is a transfer of an interest in property from the owner to the hard money mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.

The deed to secure debt is a mortgage instrument used in the state of Georgia.

Types of Hard Money Mortgages:

Commercial  Hard Money Mortgages

Commercial hard money lenders charge hefty interests on commercial lending. In commercial mortgages the loan to value ratio (LPV) is in between 50%- 70%. LPV depends on the real estate value and the type of business that functions out of the property. Mortgage created under commercial mortgages are a lien on the title to the mortgaged property.  The interest rates will be any where between 15%-21%. Foreclosure of such loans will require a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.

Residential Hard Money Mortgages:

Residential hard money lenders charge 3 to 6 percentage points more than the conventional source of loaning agencies. In residential mortgages the loan to value ratio is in between 65%- 75%. LPV depends on the real estate value of the property. Mortgage created under residential mortgages are a lien on the title to the mortgaged property.  The interest rates will be any where between 12%-18%. Foreclosure of such loans will require a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.

Hard Money Bridge Loans

Bridge loans

A bridge loan is a short-term loan for an individual or business in anticipation of permanent or financing is obtained from a less interest charging source. Money obtained after permanent or refinancing is obtained is used to clear of the bridge loan. The interest rates for such loans will be in the range of 12 – 15 %.

Who Opts for bridge loans in Georgia?

Usually people who what to purchase a new residence and short on down payment take a bridge loan on currently owned home which is up for sale or till a loan from a bank or a less interest charging financial institute is obtained. In case the property to be purchased is an investment and the property is part of the auction, the purchaser has only two to six weeks time to complete the transaction, bridge loans are opted. Long term lending sources cannot give money in that quick time.

Bridge loans are also obtained by developers to start a project while permit is applied and yet to be granted. Since the nature of project will determine whether the project will get permission or not, the interest rate is very high almost 21%. These types of loans are offered by all hard money lenders. Hard money lenders who can take such huge risks will offer these loans. Once the project obtains permissions, it becomes is easier for the developer to get loans from more conventional sources.

About Bridge Loan Lenders in GA

Here are some of the GA hard money lenders who provide brigde loans- Atlanta Private Lending, Brook View Financial, EDC Capital Partners, Piedmont Capital Lending, Peach Stone Capital, Valuation Mortgage Capital

Advantages and Disadvatages of Hard Money Loans in Georgia

Out there hard money lenders will give you loads of advantages of hard money loans and never talk about the disadvantages. I have captured some of the major advantages and disadvantages of hard money loans.

Advantages of Hard Money Loans in GA

• Documentation is Easy
• Processing is Faster
• They are not as strictly regulated as banks and mortgage lending institutes are
• Less tedious procedure
• Bigger spectrum of loan types
• The credit record of the borrowers is not a major criterion

Disadvantages of Hard Money Loans in GA

• Hard money rates are more than the bank rates. Usually it will be 3 to 6 percentage points above the bank interest rates for real estate. In some cases where the risk of loan default is more, the interest rate could be as high as 21%
• Hidden charges
• Most of the customer protection regulations are not applicable
• Some hard money lending companies charge up to 2% to 6% of loan amount as processing fee or upfront points

About Hard Money Lenders in Georgia practices:

Hard Money Lending services are mainly restricted to major cities and towns. In smaller towns raising hard money is difficult. Some of the common difficulties are lack of valuators in the area, assessing true value of the property due to lack of references in the area.

Hard Money Georgia

Who is opting for hard money loans in Georgia?

The situations in which one opts for hard money are an individual having a bad credit score, those people having no credit status, defaulted earlier, no income proofs and the stable income proof is available, need immediate refinance, need of short-term money and who do not have a complete set of required documents.

These people opt for different kinds of hard money  loans. Here is a list of loans.

Hard Loans Types:

Types of Hard Money Loans

1)     Bridge loans

2)     Acquiring a Real Estate Owned properties acquisition

3)      Loans on lots and acreage with utilities

4)      Fore closure bailout

5)      Business Loan

6)      Rehab Loan

7)      Mezzanine Loans

People who seek hard money loans in the above mentioned categories approach Money lenders or brokers who represent the money lenders. Brokers prepare and submit proper paperwork and in return take a percentage of the loan amount.

It is always better to approach lenders directly and deal personally. This way one may save brokerage money. But if you are not confident of doing the paper work your self then approach a reputed brokerage houses.

In my next post I will try to cover some the hard money loans in detail. I will also try to give some examples under each of these hard money loans.

GA Hard Money Loan

Here is my post on conversation with one of the agent of a leading Georgia hard money lending company.

Me: Hi! I am looking for a loan for a REO acquisition.
Agent: Yes we do give loans. Where are you calling from?

Me: I am calling from ******, GA. I am eyeing a REO property in Atlanta.
Agent: Have you finalized the Deal?

Me: Yes, I need about $200,000 as loan for a period of 9 months. What do you generally charges?
Agent: We charge interest based on the property. However we can only approve up to 75% of value of the property. What is the total cost of the property? Give me more details about the location and we get back to with a quote.

Me: I agreed and gave the details.

After couple of hours later..

Agent: (Typical sales call greetings) Since the LTV is less than 75%, we would like to tell you that we can offer you the loan @ of 15% per annum as interest. Let us know when you need the loan?
Me: 15% is a little high can it reduced since the loan is only for 9 months period?

Agent: Sorry sir, we cannot quote below this.
Me: Is there a processing fee and other costs that I have to incur?

Agent: Yes sir, we charge 4 % of the total loan amount as fee. This is an upfront fee.
Me: What do you mean by upfront fee?

Agent: you need to pay this money before we start the process. Upfront fee includes, Payments to scrutinizers, if things are in order then processing fee and legal fee.
Me: what if you deny the loan after your scrutiny? Will you give me back my upfront fee?

Agent: We will give only part of the amount. As we also incur costs for conducting survey on the property.

Me: Typically how much will you hold back?
Agent: Around 50% of the upfront fee.

Me: Are there any others things I should be aware of before I take the loan, like payment details, payment mode and so on?
Agent: we expect you to come to our office or let us know your availability; we will send one of our agents to give you more details.

I shared my details.

Waiting for the agent…….and waiting…..( its been two days)….

Georgia Hard Money Lenders

Hard Money borrowers in Georgia are ever increasing and Georgia Hard Money Lenders say that this trend is going to continue for some time. The melt down in financial Sector has triggered regulatory authorities to make changes in the lending regulations for real estate. According to the new regulations and guidelines,  getting a loan for real estate needs from banks and mortgage lending institutions has become even tougher. So people like you and me are left with no choice but to look out for hard money lenders to provide financing for property investment. 

Pros & Cons of Georgia Hard Money Lenders:

Having said that, one should be aware of pros and cons of getting a hard money loan. One should take a good look at what they are getting into. The fine print of legal documents is not to be neglected. It is always better to approach reputed hard money Lenders for loans in Georgia.

About GA hard money lenders:

Here are some of the GA hard money lenders- Atlanta Private Lending, Brook View Financial, EDC Capital Partners, Piedmont Capital Lending, Peach Stone Capital, Valuation Mortgage Capital to name a few. Most of these lenders are concentrated in Atlanta. So, there will be an emphasis on Atlanta hard money loans. In the future posts about hard money financing for both commercial and residential real estate,  I will cover these lenders and loans in greater detail.