HARD MONEY 2nd LOANS

1. Consumer Purpose 2nd loans secured by your
   1 – 4 unit primary or second home, with 51% or more of the net proceeds of the loan used for consumer, household, or personal purposes.– For this type of transaction and collateral we will loan UP TO 65% of our appraised value of the property, less any balance owed on your 1st loan, and subject to specific guidelines, restrictions, and conditions.1-a: This financing is also available in the form of a consumer-purpose bridge loan. The legaldefinition of a residential bridge loan is an equity loan made against one property listed for sale or under contract for sale for the express purpose of a down payment or payment in full of a replacement residential property that has been identified and an offer to purchase pending or made. For these scenarios we will offer up to 65% combined financing on a 2nd loan with a 12-month balloon term.
2. Consumer Purpose 2nd loans secured by residential 1 – 4 unit investment property, with 51% or more of the net loan proceeds utilized for personal, consumer, or household purposes.– For this type of transaction and collateral we will loan UP TO 65% of our appraised value of the property, less any amount owed on your 1st loan, and subject to specific guidelines, restrictions, and conditions.
3. Business Purpose 2nd loans for those who are verifiably self-employed and / OR more than 51% of the net loan proceeds are expressly being utilized for bona fide business purpose(s) as defined under Federal law. Collateral may be a
   1 – 4 unit primary or second home or investment property.Special Note: A “Business Purpose” loan secured by a note and deed against real estate is NOT the same as a “business loan”. If you are seeking a loan for your business using inventory, receivables, etc, OR unsecured business financing, we suggest you Google the term “business banks” in your area, or “business loans” for providers of “business-only” financing. — For this type of transaction and collateral we will loan UP TO 65% of our appraised value if the collateral is your primary or second home, or UP TO 65% if an investment property, less any amount owed on your 1st loan, and subject to specific guidelines, restrictions, and conditions. In some cases, this type of financing may be entitled to a 2nd loan with “Interest-Only” payments, a balloon term, and limited or “stated income” documentation. However, not ALL business purpose loans are entitled to these features — call us for more information.
4. 2nd loans secured by NON-RESIDENTIAL (commercial) real estate and intended for bona fide business purpose only. The collateral for the 2nd loan may be commercial property such as apartment buildings, office, retail, storage, some mixed-use and other types of non-residential real estate.– The maximum percentage of combined financing for this collateral type will vary – generally from 50% – 70% of value, depending on a number of different considerations. Please call to discuss your specific needs.

HARD MONEY 2nd RULES

• 2nd mortgages are for California property only
• Minimum 2nd loan amount is $25,000 at the minimum acceptable loan-to-value ratio for the transaction.
• 2nd mortgages are secured by a Note and Deed of Trust against the subject collateral (these are not personal or unsecured loans)
• Consumer Purpose 2nd loans require verification of income to qualify per the Dodd-Frank Financial Reform Act and Federal Ability To Repay Laws effective January 10, 2014. Income can be verified by traditional means (tax returns, paystubs, W-2s, etc) or by personal or business bank statements.A “Consumer Purpose” 2nd loan is a loan secured by a lien against your primary or second home, where 51% or more of the net proceeds of the loan are intended for consumer, household, or personal purposes. Examples include debt consolidation, home improvements, foreclosure prevention, payoff of an existing 2nd loan, educational expenses, and other personal or household applications.
• Business Purpose 2nd loans require verification of bona fide “business purpose” and/or self-employment as defined under Federal Lending Law. Note: some Business Purpose loans require limited verification of income under Federal Law.
• Following the Housing Market Collapse of 2008, the Federal government (via Dodd-Frank, the Consumer Financial Protection Board and others) adopted multiple policies, procedures, and lawful measures to protect consumers from “predatory” lending practices. Hard money lenders were arguably affected most by these regulatory changes. No longer is it legal for a lender to consider “only” the equity in a property when approving a loan secured by an applicant’s primary or second home. The applicant for hard money lending seeking a consumer purpose loan secured by his/her primary or second home(s) must prove Ability To Repay.
• 2nd loans with “Interest-Only” payments and Home Equity Lines of Credit (also known as “open-ended” credit plans) are lawfully limited to Business Purpose transactions only. Consumer Purpose 2nd loans are only available as Home Equity Loans (HELOAN) with amortized payments (Principal & Interest) over a preset term.
• BE AWARE OF LOAN FRAUD. Don’t be duped into accepting an illegal loan from unknowledgable or unethical loan brokers offering “stated income“, “equity-only“, “interest-only“, or Home Equity Line of Credit terms for any hard money loan secured by your primary or second home, when the loan purpose is for Consumer, Household, or Personal use. Federal Law enforced by the Consumer Financial Protection Bureau and state oversight agencies requires proof of Ability To Repay, Amortized Payments of principal and interest, and the loan cannot be an open-end line of credit, contain a balloon payment and / or prepayment penalty.Brokers offering these terms for consumer purpose financing are violating Federal law and often commit fraud by falsifying occupancy and/or loan purpose in applications and related loan disclosures and documents, and you may be implicated if the lender is caught engaging in this practice. At the very least, be aware of “bait-and-switch” sales tactics used to lure you into applying for a loan with “Easy Qualifying”, only to be told later that you don’t qualify unless you provide income documentation and meet other conditions.Some smaller, consumer purpose refinance loans of less than $40,000 which fall under the Federal definition of “high cost” may not be eligible to have lender points and fees rolled into the equity from the property. In some limited cases, lender points and fees must be prepaid into escrow in order for the lender to fund the balance of the financing — known as “gross funding”. This is typically limited to smaller loan amounts and consumer purpose transactions and may not always apply. Call with questions or concerns. 

“I would tell anyone looking for a great second mortgage to call you first! Even with my credit being less then ideal, you still found a way to get me the money I needed for my business. Thank you again.”

~ Ralph B., San Diego, California