All Forum Posts by: Trudy Smit

@RonCLimer. Thx, both good complimentary borrower actions plans. Agreed, that's the way to focus on end result regardless.

@JScott Thank you for reply. I'm hearing that basically the bank or lien holder defines the protocol. Interesting though, it seems unfortunate in situations where the lien holder is acting on behalf of the investor(s), whether it be themselves or other stakeholders like fixed income pensioners who could really benefit by recouping more principle from a higher, all cash no contingency offer, why they wouldn't insist on seeing subsequent offers prior to making their decision to accept/decline. But that's another long discussion. Appreciate the insight.
@RonClimer - I hear you on focusing on what may be unique to CA law, mls rules & ethics. That's what I'm trying find out. I'm not the realtor here, nor the lienholder, but one of the buyers. No matter if I'm buyer # 1 or #2, just trying to figure out the rules, facts and let chips fall as they may to better deal with the next one. Thanks, the FLA insight helps.
@Patrick L Thanks. Sounds like in CA the lienholder typically would never find out about a backup offer once the seller accepts and submits the contract to the lienholder for approval?
@Wayne Brooks - Sounds like lienholders in CA typically never see subsequent offers on short sales which makes me curious - Should material info that could impact the value of the transaction not be shared with all stakeholders. In short sale, the lienholder is definitely a "stakeholder" otherwise he wouldn't have subject to approval rights. Correct? Agree, hoping that someone from CA chimes in. Thanks all.

Can someone shed some light on what is the CA rule or protocol in the following Short sale scenario?:

Buyer 1 has an executed contract for $380,000, meaning Seller accepted the offer and offer is being presented to the bank for $380,000, subject to bank approval.

About 2 weeks after, but still before Bank has approved or declined Buyer #1's offer, another all cash offer comes in for 400,000 by Buyer 2.

Understand that seller can only accept 1 offer and the offer by buyer 2 becomes a back up offer, but question is:

Does the short sale listing broker inform the bank that there is a higher back up offer or is that not disclosed to the lender. Is there a DRE rule or requirement that creates a uniform practice in this situation? What the standard here? Thanks in advance

In a tight lending environment as we have today, an effective loan broker who gets the loan done in a timely manner with the best possible terms for the client at a fair and reasonable charge for their services is an excellent outcome. The challenge is finding the right adviser or agent for the right loan and circumstance.

Loan Brokers & Agents offer their loan facilitation and advisory services for a fee or commission. Loan brokerage companies can run the gamut from an independent 1 person operation to a publicly traded multinational corporation that employs thousands and whose loan advisory services are just one of the many services offered.

Direct Lenders offer their own proprietary product lines… and information. Example - If you land on Wells Fargo’s site, it’s highly unlikely you’ll find information on lending programs for Bank of America. This clear line is more likely to blur when talking to smaller private lending companies and advisers who typically access private client & investor funds. Are they brokering? Lending? It's key to ask who's the actual lender.

I'd suggest early in the process - talk to many, choose carefully, commit once.

Hi Navi

Sounds like you're looking for a bridge loan to complete construction.

The bridge loan is designed to provide temporary passage over a financial obstacle or rough spot, in place only until permanent financing can be arranged.

Duration for mortgage bridge loans typically range anywhere from 90 days up to 3 or 5 years which is considered short term for real property or mortgage loans.

The monthly payments are usually calculated on an interest only basis with the principal balance coming due as a balloon payment at the end of term.

Bridge loan rates are typically much higher than their corresponding conventional counterparts.

Finally, bridge loan financing typically refers to loans backed by real property or mortgages. Some, but not all in the industry use the term “bridge loans” and “bridge loan lenders” interchangeably with “hard money loans” and “hard money lenders”.

A hard money loan is a high interest, asset-based loan, collateralized by real property, offered by private investors, designed purposely to bridge a challenge facing the borrower. This challenge is typically, but not always, a combination of adverse credit issues and an immediate need for liquidity (cash).

A rational borrower would not seek out a high interest alternative loan if a conventional loan were available, so in that sense, it’s not a stretch to describe a hard money loan as a loan of “last resort”.

If you can, go conventional, if not, the key to successful hard money loan is successful execution of the exit strategy. Shop around & get good counsel.

Hi Bruno: Most of us are conditioned to bank rate sheets that show the institution's policy for acceptable minimum credit score and we equate credit score with our ability to get the loan.

In theory, the 4 "C's" of lending, it's the capacity to repay which determines whether or not you get the loan. Then the quality and condition and value of the collateral will be factored in and depending on the banks policies, rate add- ons for things like rural property, or non owner occupied property will increase the rate.

Finally, if the capacity to repay and the quality of the collateral passes their underwriting guidelines, your credit score then determines the "rate" you'll pay for the use of their funds. So, talk to your adviser/broker about DTI and the rate add-ons for the different types of collateral characteristics in your planning.

edward - So don't leave us hanging - come back and tell us how this got resolved.