Transactional Funding For 30-90 Days

The world for short sale and some REO investors has been changing, with banks more frequently requiring holding periods before the property can be resold.  Most of the bank holding period requirements we are seeing are for 30 days, but in certain situations banks are requiring up to a 90 day hold.

Holding periods requirements impose two challenges for the investor.  The first is higher transactional funding costs, or the need for private money and likely funds from the investor to fund the purchase.  The second is that to use transactional funders the investor will need to have their end-buyer financially committed to their purchase from the investor.  This is usually accomplished by requiring higher than normal "Security Deposits" or "Liquidated Damages" as opposed to traditional Earnest Money.  The amount of funds at risk from the end-buyer is a primary consideration for transactional funders because we are funding noticeably higher amounts than hard money lenders, and thus have much less of an equity cushion. 

On the positive side, banks appear to have changed their attitude towards short sales and are generally encouraging them and giving faster approvals.  REO's on the other hand are at very low levels and are more difficult to obtain discounts on.  We do expect that REO inventory levels will increase through the end of this year as more foreclosures are worked through the pipeline.  Until that happens many invesotrs are jumping back on the short sale bandwagon.

Investor Funding Alternatives provides both Transactional and Extended Transactional Funding to investors under contract to purchase and resale properties.