The Belt Is Getting Tighter

An informal survey of numerous loan officers around the country shows that the belt is indeed getting tighter. There is money available, but it appears that the money is staying on the sidelines. With Fannie Mae and Freddie Mac’s reported losses (see the following AP article by Alan Zibel “Freddie seeks gov’t aid after $25.3 B loss”
), the tightening of lending will most likely continue and may worsen. Loans insured by the above-mentioned companies and the Federal Housing Authority (FHA) will see increased scrutiny. Both property owners and borrowers will continue to be under the microscope.

At all levels, the demand for alternative financing is increasing, which makes approving and funding hard money loans more difficult to some extent. Today, hard money lenders see borrowers with 700 FICO scores or higher. These borrowers have properties with strong values and lower LTVs. The typical hard money borrower, who, a few months ago, was able to get any money needed, will find getting a loan funded today much more of a challenge.

Getting a loan today from a hard money lender will depend not just on the property but also on the overall picture of the borrower. An important component to successful funding will be the exit strategy - how a loan will be repaid. Borrowers, loan officers, and account executive need to be willing to work closely together in order to make financing happen. Once you have a loan approved, move forward quickly to close the loan, as it may not be available tomorrow.