While most Mortgage Brokers focus most of their time and energy originating “A” Paper Loans, situations do come up when even an “A” Paper Borrower might need a Private Equity Loan in order to “close the Deal”.
Most of the time this situation occurs when the “A” Paper Lender is dragging their feet or better yet going crazy with underwriting conditions that are imposed on the Mortgage Broker’s Borrower.
We have seen instance after instance where due to a small insignificant matter led an “A” Paper loan going down the drain. In such a situation time might not be available to close escrow with another “A” Paper Lender in the time agreed to in the Purchase Contract with the Seller. Or in the case of a simple refinance where the Borrower needs funds for a Business or Investment purpose a Private Equity Loan can provide a Mortgage Broker’s Borrower the funds they need when the “A” Paper Lender proves difficult.
When might a Borrower Need a Private Equity Loan?
Following are the most common situations where a Mortgage Broker should suggest a Private Equity Loan to their Borrowers:
The Borrower has Credit Issues:
- Current and past delinquent mortgages and consumer credit that are not acceptable to the big banks and other institutional lenders.
The Borrower has Income Issues:
- This covers everything from limited income documentation to no income documentation whatsoever, either way the big banks aren’t accepting the income documentation
There are Property Condition Issues:
- Deferred maintenance and contemplated property additions not allowed with traditional bank financing
In additional there are numerous types of properties that the big banks and institutional lenders will not often fund, some of which are:
- Gas Stations
- Auto Repair Facilities
- Fix & Flip Transactions
- Vacant Land
- Unpermitted property additions
The Borrower Needs the money FAST:
A Mortgage Broker that offers a Private Equity Loan to their Borrowers can prove be a good business decision for both the Mortgage Broker and their Borrowers.
Mortgage Brokers should ALWAYS inform their Borrower/Clients that anytime a Private Equity Loan is obtained that a plan should be put in place to pay the loan off, by either refinancing when credit, income & the property is acceptable to an institutional lender or by simply selling the property.
Often times Borrowers contact our company directly or through their Mortgage Broker to obtain funds for a GOOD business or investment deal that would not remain available when allowing for Institutional Lender’s loan processing time frames. We always suggest a plan to pay the loan off, whether that plan includes credit repair, income documentation matters or necessary improvements to the property’s condition. Often times income documentation is a much harder challenge, since the underwriting requirements of institutional lenders often demand two years’ documentation of business income and often the same time frame for employed Borrowers.
This type of situation provides an opportunity for Mortgage Brokers to earn a commission from originating the Private Equity Loan and later another commission from originating the institutional refinance.
We’re currently offering Private Equity Financing at interest rates that range from 9% to 12%, with most of the loans our company funds having an interest rate of approximately 10%.
Whenever a Mortgage Broker has a Borrower who might need or benefit from obtaining a Private Equity Loan all the Mortgage Broker needs to do is provide us with the address and the “Deal Points” and our company is usually able to make a lending decision, which includes a proposed interest rate, loan terms together points and closing costs.
Submitting the Borrower’s information to our company can be done over the phone or through the Mortgage Broker Portal on our company’s secure website.
We always provide a preliminary underwriting response the day a Mortgage Broker submits the Borrower’s information to our company.
Private Equity Loans are very much like institutional loans but with only a few differences. The primary differences being the approval requirements and the funding speed. Private Equity Loans are much easier to get approved when credit or the condition of the property is an issue.
The typical time frame from Mortgage Broker loan submission to funding in typically “1” to “2” weeks. There are instances when it takes longer but that is usually associated with title matters or matters not disclosed by the Borrower that later pop up at the last minute that requires additional time to resolve.
Our company is highly dedicated to serving the needs of the Mortgage Broker community and their Borrowers with Private Equity Financing.
Our company has a convenient online Broker portal just for Mortgage Brokers on our company’s website that makes it convenient to obtain a loan quote on a potential loan or to get a formal loan approval on a loan in process. Our website is fully secure and is an accredited SSL domain.
If you are a Mortgage Broker and would like to obtain additional information on how a Private Equity Loan can be a valuable choice for both you and your Borrower, then please call our company at (888) 797-7970.