Money Talk

What Private Hard Money Lenders Do

Private hard money lenders are often individuals or small companies that provide special kinds of real estate loans for various asset classes. They offer borrowers with mortgage loan issues short-term loans or bridge loans, the amounts of which are dictated by the value of property rendered as collateral for the loan. The higher rates (as compared to banks and brokers) these lenders exact are ostensibly due to the risk involved in these transactions. These lenders have come into play by necessity – to provide loan services to borrowers who are unable to receive financial aid because of the current climate of the real estate mortgage industry.

Even with the higher interest rates entailed, the high-risk borrowers who have been turned away by ordinary lenders may prefer to work with private hardmoney lenders. The risks in these deals are mitigated by the equity securing the loan, typically ranging from ten percent to thirty percent. Aside from individual borrowers, high-risk companies also work with these lenders, as they, too, may have been unable to transact with larger lenders because of the increasingly stringent guidelines for underwriting the latter implement. Read more…

Appraisal comp checks are limited

Recently, I had one of our clients request a “ max value comps check ” to help him determine  if he had a deal .  I understand that the loan agent cannot make the loan if there is not enough equity in the house , so both the agent and the borrower want “ maximum value possible ”.  This is a very common request from loan agents and we always provide comparable sales information, but they aren’t always what the agent thought he was going to get . 

Regarding “comp checks”, USPAP and logic set boundaries that the professional appraiser must stay within.  My greatest hope is that understanding these boundaries will help mortgage professionals better work with their appraiser. 

• The appraiser cannot make a value judgment without going through the appraisal process.

• USPAP prohibits the appraiser from making a value judgment before completing the appraisal process.  Appraisers who tell you if your estimated value will “work or not” are unethical and are at risk of losing their license. 

• Logic prohibits anyone from making an accurate value judgment before obtaining all the facts. I.E. market conditions, location, condition, size, detriments, and the list goes on and on.  How would you feel about your doctor if he told you, you needed an operation based on a phone conversation?  Looking at a list of comparable sales and stating a value estimate sets the appraiser and the lender up for problems.  Read more…

Philippine Peso touches 46 level vs. US dollar

The peso strengthened against the US dollar Friday and touched the 46 level on reports of positive growth forecast of International Monetary Fund (IMF) for the Philippines this year and some bleak US economic data.

The unit improved by P0.15 after it closed at 47.1 against the US currency from Thursday’s 47.05 closing. This after it reached a high of P46.99 by mid-trade amid its weakest trading level of 47.21 during the day.

This brought the day’s average to 47.06 from day-ago’s 47.14. Total volume of trace reached P695.5 million, lower than the P1.1 billion Thursday. Traders said investors noted that reversal in the IMF 2009 growth forecast for the country.

IMF on Thursday announced that it now projects the domestic economy to growth by one percent this year from its earlier projection of a one percent contraction due primarily to the continued resiliency of remittances from overseas Filipinos.

Traders also said the expected increase of unemployment rate in the US is a disadvantage to the US currency.

The US Labor Department is set to release its September 2009 unemployment data Friday and analysts expects it to reach 10 percent, which has not happened since June 1983.

Traders project the local unit to register its high end at 47.50 next week.

Philippines registered an improvement in its International Investment Position

The Philippines registered an improvement in its International Investment Position (IIP) in end-2008 amid the risk aversion due to the global slowdown.

Initial Bangko Sentral ng Pilipinas (BSP) data show that the country’s IIP at the end of last year stood at net liability of US$ 26.9 billion, better than the previous year’s net liability position of US$ 28.5 billion.

“This came about as the decline in total external financial liabilities compensated for the slight drop in total external financial assets,” BSP said in a report.

BSP said the country’s total external financial assets from the rest of the world totaled to US$ 65.1 billion as of end-December 2008, an improvement of 2.6 percent compared to year-ago’s US$ 66.8 billion.

Also, the country’s total external financial liabilities dropped by 3.6 percent to US$ 92 billion during the same period from the US$ 95.37 billion in end-December 2007.

“The meager improvement in the IPP reflected the weaker external payments position in 2008, as the BOP yielded a surplus of US$ 89 million, markedly lower than the US$ 8.6 billion surplus realized in 2007,” the report said. Read more…