Posted by Max-Va on June 12, 2006 at 13:29:55:
Would you share their name? I have not seen a HML lend at 80% the best I have seen is 70% with 65% being normal.
Prequal letter from lenders? - Posted by PamJM
Posted by PamJM on June 11, 2006 at 20:38:02:
Do I need a prequalification letter from a lender before I can even begin submitting offers on homes (I want to wholesale right now). My latest REI training seems to say so.
So, I’d need to go to a HML and let them pull my credit, etc. and get the letter and then attach it to any offers? Even though a true HML won’t be concerned about my credit in the long run?
Re: Prequal letter from lenders? - Posted by John Corey
Posted by John Corey on June 13, 2006 at 11:52:35:
A pre-qualification letter does not say what has been done to qualify the borrower.
It just says that subject to certain conditions the lender will make the loan to the borrower. Almost all such letters will indicate that the letter is subject to verification of the property’s details.
In many situations no letter is needed. Some of the time a letter is required it is the RE agent who really created the need. The letters are not binding and any smart seller will know this. Maybe better than no letter but only just.
John Corey
Re: Prequal letter from lenders? - Posted by Max-Va
Posted by Max-Va on June 11, 2006 at 22:42:28:
HML do not pull credit. They can issue a letter saying you are approved for funding contingent upon property details.
Should HMLs pull credit? - Posted by GMann
Posted by GMann on June 12, 2006 at 11:25:52:
I know a quite a few people will disagree with me on this but I think every lender should pull credit to see if the borrower is in bankruptcy or not. Credit isn’t an issue with HMLs but the bankruptcy Trustee has to approve any loans if you are in a bankruptcy.
Re: Should HMLs pull credit? - Posted by Max-Va
Posted by Max-Va on June 12, 2006 at 12:37:08:
I agree. I know it is not commonly done. If I would ever get to the point where I could be a HML. I would want to pull credit for a couple reasons:
- bankruptcy
- if property is unsold when note is due could they do a refi to cash me out
- see what type of charactor I am dealing with, do they follow thru on their obligations
I am really surprised that more HML’s do not do credit checks on borrowers. As the market slows and buyers become scarce, more may do this because a HML probably does not want the properties.
Re: Should HMLs pull credit? - Posted by Shaun
Posted by Shaun on June 12, 2006 at 13:15:46:
The HML I use for my investors pulls credit. I guess some would argue they are not a true HML, but they actually are. They just do not loan solely on equity. They have guidelines similar to conventional loans, but they still close in 7-10 days and lend based on 80% ARV.
Re: Should HMLs pull credit? - Posted by John Corey
Posted by John Corey on June 13, 2006 at 11:49:23:
Shaun,
Call your lender what ever you want. The description you provided indicates they are not a pure hard money lender. The LTV is too high for the risks unless they do something (like check credit) to help reduce the risks.
The test of a HML is not if they close quickly. If they only care about the asset securing the loan they are a hard money lender. If they need more than the asset (normally when the LTV is higher and when ARV is the measure) then they might be called a non-conforming lender.
It is a historical definition so not really one person or another can argue. It is what it is.
Granted an investor should focus on a solution that works for them so there is no reason not to use a non-conforming lender if that makes sense.
John Corey