What Instruments Other than a Mortgage Can Secure a Hard Money Loan

8 Replies

Hey Guys,

I'm using a hard money lender that's requiring me to record a mortgage at closing. The mortgage tax on that isn't cheap. On the house i closed on yesterday it was over $800. Doing several of these per year I feel like I am wasting quite a bit of money. Is there any other way for my lender to secure his investment without having me sign and record a mortgage?



No, at least not that I have ever seen.  That recorded note is how you lender can assure that they get paid back, or that they can foreclose and take the property if you screw up. Without that, I cant imagine a lender giving you any money. You just need to add that $800 into your expenses.

to your success


Doc stamps in Florida are pretty high.  In Georgia we avoid the mortgage tax if its under 36 mos. I'd have to double check what goes on down there to see if there are any exclusions for flips and such.

As far as avoiding the recording altogether I doubt it.  It depends a lot on the lender- I bet my Private Lender would do it on my word if I asked him to at this point, but we've got a hell of a history together.  Most of the Hard Money guys aren't lending their own money so can't do too much outside the box.  If you've got other collateral (like a paid for rental) you can possibly secure it against that and leave it secured for future deals, but that'd be pretty rare.

Nope.  In Florida, the mortgage recording fee is 0.35%, about 1/3rd of 1 % of the loan amount.

I believe a UCC1 will work for an investment property, but only if your lender is comfortable with this recorded instrument.  I don't believe he/you would have to pay for a mortgage state tax if you use a UCC1.

A UCC filing is for personal property and doesn't perfect a lien on real property. If you have other assets, cash on deposits, securities, boats, planes, cars, trailer, tons of appraised jewelry, inventory, leases or such, then you can use a UCC to file a lien on those assets.

That will put most lenders out of their comfort zone dealing in RE, and seizing personal property is a different game than a foreclosure. It may also put a lender wearing a different hat as to their type of business lending, acting as a pawn broker or bank.

I'm afraid FL has you by the taxables there, figure it in as a cost of doing business there. Good luck :)  

A UCC filing is for personal, non real, property.  Equipment, water softening systems, etc.

how about just a straight lien on the property, if there is no others then that would be a 1st lien position, same as a mortgage would be. 

wouldn't that do pretty much the same thing? And theirs little/ no cost to file a lien.

What type of lien? Like a workmen's lien? A material Lien? Look up the state law concerning filing false liens and see what that gets you. Filing wrongful encumbrances on real estate is a violation of law in all states. There is ONE way to secure a loan on real estate and that is either with a mortgage or deed of trust depending on the state, there are no other ways. :)

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