Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
Here is the situation...a buyer is trying to buy an owner-occupied SFR with 45% down, mortgage amount of approx. $240k. Great credit, good employment history. The problem has to do with her lack of a working visa but she does have the right to work here. It appears she don't fit perfectly into Fannie Mae/Freddie Mac criteria. This seems like a no-brainer for a private lender. I have even considered making the loan but I'm a little short of $240k cash but I might be able to find someone to come in with me for the rest. My question is, how do I find someone who would be interested in making this loan and how fast can it be done? Also, if I can find someone to go in with me to carry the paper, is there someone who can help me write the loan (escrow?)?
This seems like a no-brainer for a private lender.
A normal non-owner occupied loan for say, a flip, could be done in a day or two, Shari. Yours sounds like an owner occupied loan, however. This means Safe Act compliance, a broker that has an NMLS license, and a much more rigorous borrower qualification process. Since you’re looking for partners, it also sounds like you’ll need a broker who knows how to fractionalize a note.
These deals tend also to be considerably riskier that those that are non-owner occupied. Plus, your borrower might expect a relatively low interest, long term, “homeowner” type loan which means finding a private lender willing to loan at a relatively unappealing interest rate & term (for you too).
Sorry to burst your bubble, but this but this is not the “no-brainer” I know you’d like to believe. It might be easier to find a conventional lender for your buyer.
This seems like a no-brainer for a private lender.
A normal non-owner occupied loan for say, a flip, could be done in a day or two, Shari. Yours sounds like an owner occupied loan, however. This means Safe Act compliance, a broker that has an NMLS license, and a much more rigorous borrower qualification process. Since you’re looking for partners, it also sounds like you’ll need a broker who knows how to fractionalize a note.
These deals tend also to be considerably riskier that those that are non-owner occupied. Plus, your borrower might expect a relatively low interest, long term, “homeowner” type loan which means finding a private lender willing to loan at a relatively unappealing interest rate & term (for you too).
Sorry to burst your bubble, but this but this is not the “no-brainer” I know you’d like to believe. It might be easier to find a conventional lender for your buyer.
Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
13y
Jeff is right. Originating owner occupied loans carries a different set of risks, with tremendous liability to the lender.
Possible solutions:
1) Connect with a mortgage broker who knows companies that may originate this type of loan.
2) Have the seller originate carry back financing (they have a special exemption) they can sell the loan to a note investor down the road if they need liquidity.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
I agree with Jeff and Ellis. Many (or most) private and hard money lenders why away from OO loans due to all the compliance issues and typically lower returns.
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
13y
What about a portfolio lender who doesn't sell their loans back to FM/FM? The property is in CA. I've got my favorite mortgage broker working on this but I wanted to put out some more feelers.