Recent reports that mortgage credit availability is increasing would have you believe that the banks are lending like its 2006. A little perspective, however is in order. Mortgage credit availability is measured by a single index number ranging from zero to one thousand and is referred to as the Mortgage Credit Availability Index (MCAI). The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The monthly credit availability index

Introducing Private Money [Hard Money] Lending – Part 2: How Hard Money Works As we discussed in Part 1 of our series, banks are not the only entities to provide real estate secured financing. Private money (or hard money) lenders offer an important alternative to institutional and conventional lenders for many who own, buy, and invest in property and provide a valuable option for many types of real estate transactions. Let’s continue by taking a look at how hard money lending works. Simple in Concept, Complex in Practice Private money lending is a simple concept characterized by the arranging of

In 2007 and 2008, the mortgage market took a hit that mimicked the gigantic Wall Street downturn. Even now capital markets continue to lack confidence in real estate lending and banks, who are not immune to the damaging effects all of this lost investment and real estate value, aren’t creating “make-sense” real estate loans. But there is a bright spot for people who want to invest in or borrow against real estate. This bright spot can be found in a little know niche in mortgage lending called private real estate collateralized (or “hard-money”) loans, which are also referred to as

In Part 1 of our series, we introduced private money lending and in Part 2 of our series, we saw how hard money lending works. Let’s continue by taking a look at the underwriting aspect of hard money loans. Underwriting includes all the analysis necessary to confirm valuation, income, property condition and the borrower’s capacity to execute on its repayment strategy. This might sound similar to the underwriting process of a bank for a bank loan but in reality, underwriting private money loans is a completely different process than underwriting traditional loans. In the private money world – neither two