Buying note at 50% of BPO. HML will lend up to 75% LTV. Does this mean the buyer will receive cash at the closing?

7 Replies

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

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.

Ashcroft Capital
A national multifamily investment firm
Three Reasons Investors May Prefer Real Estate
Read three reasons why investing in real estate private placements may provide several advantages.
Read More Here

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?

@Account Closed

No.......No.......and No.

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.