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Do you know your loan broker?
There was an interesting article in the Wall Street Journal (www.wsj.com ) regarding mortgage brokers / Loan arrangers. In this article the author discussed a drastic rise in the fees that borrowers were being taken for without actually getting a loan. Within the lending industry this is a huge problem where a handful or lenders, brokers, loan arrangers, etc… promise the moon to folks and take their money without producing results.
Fortunately Fairview is different. Fairview is a direct hard money lender that funds its own loans, underwrites its own loans, and services the closed loan. There are no upfront fees for Fairview to evaluate a loan and let the borrower/broker know whether the transaction will fit into our hard money lending guidelines.
As a borrower, how do you protect yourself? First Google the broker/loan arranger/lender to see what comes up (i.e. lawsuits, negative postings, etc…). Second, call the lender directly to ask about their programs. Finally, if a transaction smells to good (borrower has a 500 credit and is promised a 3% interest rate) then it likely is too good to be true.
Fairview Commercial Lending is a direct hard money / private money lender. We have offices in Georgia (www.georgiahardmoney.com) as well as in Colorado (www.cohardmoney.com). We never charge any upfront fees and guarantee an honest answer quickly. Fairview also services loans for both our own portfolio and others (www.fairviewservicing.com) and can be reached at 404.634.1270 or http://www.fairviewlending.com/contact.htm
Many people are wondering what impact the bankruptcy filing by Lehman brothers has on commercial lending. Lehman Brothers was a large player in commercial real estate lending. Up to about 12 months ago their small balance commercial lending program was probably one of the largest in the country behind Interbay Funding.
Lehman got caught up not only in the residential sub-prime debacle but also in the stated commercial lending mess. The root cause in the commercial arena is that loans were made to people with good credit who were unable to prove their income. This model works when applied correctly. Unfortunately Lehman brothers along with a number of other small balance lenders did not apply the model correctly. Lehman relied on outside appraiser opinion of value and loaned sometimes 80-90% on the appraised value. As hopefully everyone knows by now, relying on third party appraisal is not the way to best establish value.
To prevent the problems in valuation, many firms (that are still around), underwrote the value of the real estate in house and also required an appraisal by a firm selected by the lender. Sadly most lenders, like Lehman, did not do the same amount of due diligence. To be fair, the small balance program is not what brought Lehman to its knees, but it does serve as a lesson to other lenders about what should or should not be done in the future.