Hard Money Lending

[Mike Boyd]

A hard money lender......or a finance company such as Beneficial are a good source of clients during a financial downturn. However, be very careful as they will sue you just because your eyes are blue...or not blue. My experience has been with private investors who will drive the comps and look for flaws. Double check your data, inspect carefully, and, not that you would, but do not stretch. Insist on getting paid out front. Check with the client as to what form he wants or if he would prefer a narrative. Do not discount your fee. I once did an appraisal where the investor was an appraiser! I did not know it until she called and asked about the roof. I had known her for years. She did not make the loan because there was a stack of roof shingles on the ground and thought it probably need a new roof.

 

[Midwest Guy]

Why not 1004? The stated purpose of the form in mortgage related transaction! 1004 does not day Federal only.

 

[The Warrior Monk]

Why not 1004? The stated purpose of the form in mortgage related transaction! 1004 does not day Federal only.

Some of the certs in new forms are there specifically to increase liability on the appraiser. If the lender doesn't require them, I would recommend not using them.

 

[Derek Harkrider]

I do these all the time on investment residential properties for hard money lenders, which is private money. These must not be put on Fannie-mae forms, but on the old forms with the language "tweaked" or on the general purpose forms you should be able to find in your software. Confirm with your client as to whether this is private money, or a hard money loan through a conventional lender. Also, confirm whether the appraisal is "as-is" or "subject-to". The hard money lenders that I work with always want a "subject-to" appraisal. They typically provide me with a list of the repairs and cost estimates which they have already produced working with a rehabber. In the report, I cite this list as a source for the estimates and make the appraisal "subject-to" these items being completed in a professional manner using good quality materials as well as any other issues of health, safety, and/or condition discovered during the rehab that need to be addressed to bring the property up to standards of the market area and to meet local codes. I advise my clients with this type of property to have a home inspector and/or a professional rehab specialist or contractor look over the house as an investor may overlook or underestimate issues that need to be addressed with the property.