The wellness of the economy has improved during the last several months. Theoretically speaking the economic depression may be over; we might be growing gross domestic product once again. However, sad to say, the credit crunch continues. A lot of banks are very worried about further deterioration commercial real estate values and rising commercial mortgage delinquencies. They worry that more large proportion write downs of their CRE portfolios may be necessary damaging their statutory solvency. Banks on the edge are very cautious about funding.
Other banking institutions, even healthy ones, along with insurance companies are sitting on their capital as they wait for the approaching wave of new regulations from Washington. Government bodies are enforcing current principles more tightly than ever while guaranteeing even difficult lending policies are coming. Lenders will not give a loan in earnest until they understand what the regulatory conditions will appear like. While the administration encourages lending with their words they're aggravating it with their strong given actions.
For many borrowers the solution has been private lending. Independently financed, often called "hard money" commercial mortgage loans are backed by private individuals or privately held businesses. These special loan providers often keep the loans they write in their own portfolios rather than sell them to the secondary mortgage bond market. Private hard money lenders aren't managed by the Federal or state Government so they enjoy much more flexibility and can finance loans faster than banks can. Multi-million dollar loans can close in less than 10 days if the deal works for the hard money lender.
The disadvantage to private lending is that prices and points are much higher than bank rates and that a lot more equity is expected. Private lending almost always top 10% with at least 3 origination points and loan-to-value ratios hardly ever exceed 65 percent.
The financial crisis has induced many good loans to be declined by banks. Additionally, slipping property values make it even more difficult to qualify for typical funding. Hard money lenders are usually able to finance deals that banking institutions are being forced to turn away. Private lending has become a crucial part of commercial real estate finance. Borrowers would prefer to have a nice, low interest rate bank loan with good agreements, but that form of financing just isn't easily obtainable right now. Private hard money lending is now well-known finance and, for a lot of striving investors, may be the only-game-in-town.
Other banking institutions, even healthy ones, along with insurance companies are sitting on their capital as they wait for the approaching wave of new regulations from Washington. Government bodies are enforcing current principles more tightly than ever while guaranteeing even difficult lending policies are coming. Lenders will not give a loan in earnest until they understand what the regulatory conditions will appear like. While the administration encourages lending with their words they're aggravating it with their strong given actions.
For many borrowers the solution has been private lending. Independently financed, often called "hard money" commercial mortgage loans are backed by private individuals or privately held businesses. These special loan providers often keep the loans they write in their own portfolios rather than sell them to the secondary mortgage bond market. Private hard money lenders aren't managed by the Federal or state Government so they enjoy much more flexibility and can finance loans faster than banks can. Multi-million dollar loans can close in less than 10 days if the deal works for the hard money lender.
The disadvantage to private lending is that prices and points are much higher than bank rates and that a lot more equity is expected. Private lending almost always top 10% with at least 3 origination points and loan-to-value ratios hardly ever exceed 65 percent.
The financial crisis has induced many good loans to be declined by banks. Additionally, slipping property values make it even more difficult to qualify for typical funding. Hard money lenders are usually able to finance deals that banking institutions are being forced to turn away. Private lending has become a crucial part of commercial real estate finance. Borrowers would prefer to have a nice, low interest rate bank loan with good agreements, but that form of financing just isn't easily obtainable right now. Private hard money lending is now well-known finance and, for a lot of striving investors, may be the only-game-in-town.
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Learn more about the financial solutions of South Carolina hard money lenders at http://www.hardmoneylenderssouthcarolina.com/