Bankruptcy & Foreclosure Loan Tips

Mortgage Options with Bankruptcy or Foreclosure

Since the credit crunch of 2008 began, hard money lenders have stepped up to fill the void in the area of lending. For those who have had a bankruptcy or foreclosure on their credit in recent years, bank loans are simply not an option. These borrowers have had to obtain hard money and private money loans for badly needed credit to finance their business and investment activities. While there are some hard money lenders who will not lend to people with a bankruptcy or foreclosure on their credit, most private lenders are stepping up to provide these loans in abundance.

 

Collateral Not Credit Scores

Because most hard money lenders lend on the asset being used as collateral for the loan, they are more likely to provide a loan to someone with bad credit. There are exceptions to this however, as some private money lenders are now starting to pull credit prior to making a loan. In fact, some potential borrowers are shocked that a credit report is a requirement of a hard money loan. These are the people who remember the days when a hard money lender would lend 100% of the purchase price on an investment property, and in some cases would even provide the money for repairs. Unfortunately, most of the hard money lenders who made such loans are no longer in business.

 

Non-Banking Loan Options

Bank lending is still very tight and inflexible, and will likely remain so for many years to come. For those who have had major hits to their credit in the last several years, hard money loans are their saving grace. Without the availability of private, non-bank financing in recent years, the recovery of the real estate market may have been a much slower process. For those borrowers with bankruptcies and foreclosures on their credit, the high interest rates charged by hard money lenders is just the cost of continuing to do business.

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