Private Lenders Have Become More Selective
Many Private Mortgage Lenders Have Changed Their Approaches To Approving Loan Requests
Some are calling the current recession an extended Christmas season for private mortgage lenders.
With most institutional lenders either being very conservative with their new funding commitments, or not lending at all, the private mortgage lending space has gotten a large increase in higher quality applications over what they would typically see.
As a result, they too have become more selective focusing on the lower risk, higher return opportunities.
Private lenders are largely divided into two camps.
The first camp is demanding higher levels of due diligence and are more focused on deals that have a higher probability of being repaid at the end of the one or two year mortgage terms that are typically issued by lenders.
This group of privates will ask to see financial statements, credit bureaus, customer contracts, personal net worth statements, and much of the same type of application info requested by a bank.
Of course there is absolutely nothing wrong with this approach, but it does demonstrate that private mortgages are more likely to be issued to businesses and individuals who have a higher probability of servicing the debt and making timely repayment than those who have a history of poor credit management or have no strong prospects for repaying the debt when it comes due.
The other group of private mortgage lenders can be categorized more at the opposite end of the spectrum whereby they are less interested in the back story and the financial profile of the borrower and more interested in the long term value of the property offered as security.
In the current recession, there are are some highly depressed properties that will generate considerable returns when things turn around. For private lenders that are prepared to be patient, financing these types of properties in the near term can become highly profitable in the event of foreclosure.
Either way, private mortgage financing become harder to come by because there is more demand than supply.
If you need a private mortgage for a residential or commercial property, I suggest you give me a call so that I can quickly assess your situation and provide relevant mortgage financing options for your consideration.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel