Friday, December 28, 2007

Hard money lending

I dug around for this story on hard money lending after hearing about it on a Wall Street Journal podcast.

Some mortgage seekers spurned by banks and other traditional lenders are turning to high-cost loans known as "hard-money mortgages."

Once thought of as a last resort for strapped borrowers, these products -- also called "private-money mortgages" -- have different lending standards than traditional mortgages and carry substantially higher interest rates and fees. These days, however, they are attracting a larger, more-affluent group of consumers.
These loans were often used by real estate investors to get quick financing for an investment property, which was later refinanced with a traditional mortgage. The Real Estate section of the Blogs I Read section has links to a couple of blogs that give real world examples of both getting and making hard money loans. Hard money loans are being used for more purposes than these bridge loans in the face of the subprime collapse.