Warehouse lines of credit!!! - Posted by SCook85

Posted by John Behle on January 25, 1999 at 14:16:35:

H.E.L.O.C. is short for “Home Equity Line of Credit”. These types of loans are available all throughout the country. It’s a pre-approved line of credit which is available on demand. In most cases, you get a checkbook to withdraw any amount you want at any time.

Lenders all throughout the nation make these lines available. Some of your local banks or credit unions should have some good programs.

Warehouse lines of credit!!! - Posted by SCook85

Posted by SCook85 on January 19, 1999 at 14:40:39:

I have been actively seeking a local bank to work with me in creating a warehouse line of credit for notes. I currently have a line of credit with FNAC which has changed the way that I do business but I am looking for something that will provide me with more flexibility.

Here are the 2 things that I am looking to accomplish:

  1. A line of credit to purchase notes with using the notes as collatoral.
  2. A line of credit that allows me to originate loans, and use the notes as collatoral. (It is important to keep in mind that these notes will be no more than 60-70% of FMV and that I will only lend on homes that I won’t mind taking back)

I have approached many local banks only to find that the people I am talking to don’t understand what it is I am trying to do. I suspect that they are not doing it for anyone else or I am talking to the wrong person.
FNAC serves my needs for the moment when it comes to having a line for purchasing notes. I am most interested in obtaining a line to create/originate hard money loans. I know that 2 of my private sources do it this way but they are reluctant to give up there contacts.

Any suggestions on how to go about this would be greatly appreciated. I don’t know if I am even asking the right questions when I go to the bank. I feel that I am because anyone doing it speaks the same language as I do, only the small bank people have a problemwith understanding what I have to say. References of Banks currently doing these types of deals would also be appreciated. By the way I have someone with millions of dolars in equity that he may be willing to put up to get the line started.

Thanks for all responses.


Re: Warehouse lines of credit!!! - Posted by Paul Macdonald

Posted by Paul Macdonald on January 21, 1999 at 06:58:14:

Just an FYI - you cannot get a regular mortgage warehouse line of credit as cheaply ratewise as you can get a regular first mortgage or a homeowners equity line of credit (HELOC) these days. So even if you found the warehouse line of credit you are looking for it would cost more than a normal mortgage.

So my suggestion is don’t waste time with the bankers by reinventing the wheel that will cost you more than an easy alternate source. Take the product the bankers understand using your contacts millions in equity and use it. You get what your looking for and the bankers provide what they are used to.

Hope this helps.

Paul Macdonald

Paper and Paper Weights - Posted by John Behle

Posted by John Behle on January 19, 1999 at 14:55:16:

As a banker told me one time, “John, if a banker has an HP12C calculator on his desk - it’s a paper weight”

I know VERY few bankers in the country that know anything about paper. They do not even know how to analyse it as collateral and few have ever made a loan against a note.

Even when you do find one that is willing, the time period is prohibitive. You can’t afford for them to mess around and check out the note you are looking at purchasing as collateral. They take too long and are too restrictive.

Myself and others that have successfully used banks that I know of have usually arranged lines of credit that are unsecured or secured by another asset. If it isn’t a pre-approved line of credit, it isn’t much good. You need to access the funds within hours not weeks. That can only happen if it is already in place with no collateral or some existing collateral.

This can happen with an investor that has equity. See the post about a FREE $350K HOUSE. It has a equity rental scenario in their that will help illustrate the principle.

Ditto - Posted by John Behle

Posted by John Behle on January 21, 1999 at 14:18:08:

We use a HELOC for much of our quick financing on notes. The rates are very attractive and they work very well.

HELOC? - Posted by Lynn (AL)

Posted by Lynn (AL) on January 25, 1999 at 12:38:25:


What’s HELOC and how can I get in touch with them?

Lynn (AL)