If the non-performing loan is being purchased, for $100,000, has a Broker Price Opinion of $200,000, and the hard money lender will lend up to 75% LTV, then the loan amount would be, $50,000 more than the purchase price. Which means in theory the buyer would receive ~$50,000 at the closing table.
Will a hard money lender makes this loan?
Broker Price Opinion: $200,000
Purchase price: $100,000
Hard money LTV: 75%
Hard money loan $150,000
Cash at closing: $50,000
Why would you pay 50% of the BPO?
A non-performing loan is EXTREMELY different than buying the property. Proceed with caution.
Most lenders will not loan on a note (and the ones that do are very expensive). Once you foreclose you could get a hard money loan on it.
Why would give 50% of BPO?
Joe's point is you're paying too much, you aren't buying the property and you may not end up with the property. And, I've never heard of an HML loaning money to purchase a note. Lenders get their money back, to the unpaid balance, even if that means selling the collateral to get their money. If you foreclosed and moved in, most likely you'll get you tail sued off. You become a lender, not a property buyer. :)
My question was unclear. The example was hypothetical and used round numbers for simplicity.
If a HML *will* lend up to 75% LTV for purchase money, on notes, and the note was purchased for far less than that, will the HML do a a "Cash-out purchase" loan?
HML will Not lend on NPN'S.
HML might lend up to 75% LTV OR 80% of purchase price, for properties, which ever is less. They want you to have some money invested. They will Never lend you more than your purchase price.