Using Hard Money Loans for Trustee Sale purchases
Posted by AZF Contributor on 5/30/11 • Categorized as Trustee Sale Acquisition
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. Hard money is essentially an asset-based loan with a high interest rate. The credit score of the borrower is not important, as the loan is secured by the value of the collateral property.
The process for a trustee sale hard money loan through our partner Capital Fund 1 is as follows:
- Borrower wins bid at trustee sale auction
- Borrower provides Capital Fund 1 with property address and winning bid price via phone, email or text message
- Capital Fund 1 underwrites property to determine loan amount
- Typically, within an hour of receiving property info, Capital Fund 1 responds to Borrower with proposed loan amount
- Assuming borrower is agreeable, appointment is set for Borrower to come to Capital Fund 1 office and sign loan documents which Capital Fund 1 will then prepare
- Capital Fund 1 Orders a full title commitment for the property which is received before the loan is funded.
- Document signing occurs later that day or the next morning
- After signing Capital Fund 1 takes the borrowers Cashier Check as well as the Cashiers Check in the amount of the loan to the trustee and pays for the property.
The process for a loan on a property that is being purchased through escrow is very similar. Feel free to ask your hard money loan questions here.
