We do not have pre-payment penalties on our consumer purpose first and second loans. We may have six month’s to one year of guaranteed interest on some of our non-owner loans.

All origination costs and fees are billed at the time of closing. The only upfront fee that our Borrowers might be required to pay would be for an appraisal on the property.

Our loans can be made to an individual, a corporation, an LLC, a Partnership or to a Trust or even to an estate in probate.

Private individuals with disposable income can invest in hard money loans through a process known as Trust Deed Investing. Such investors may invest using their savings or retirement vehicles.

Trust deed investing and hard money lending are closely related. Trust deed investors are one of the sources of capital for the private money loans made by hard money lenders. Brokers work with trust deed investors to fund hard money loans for borrowers. In the case of funds that make private money loans, the funds can be said to be making trust deed investments when they fund a loan.

Even though our lending documentation requirement are much less cumbersome then institutional lenders we do have to comply with laws and standard due diligence. So as such most of our Borrowers mortgage loans close in less than 2 weeks.

We structure the term of repayment to best comply with our Borrowers intentions. Typically, these loans are shorter terms – 3 years or less. We can structure interest only loans, partially amortized loans or even fully amortized loans. The owner occupied loans are typically for 20-30 years.

Hard money loans can have a number of advantages over traditional bank financing including:

• A simpler application process and quicker approval/disapproval decision;
• Less scrutiny of the borrower’s personal financial situation, including income and historical tax returns, compared to bank loans;
• Borrowers can allocate less time to seeking financing and instead concentrate on other business;
• Borrowers can take property in a corporation or LLC;
• Most hard money lenders do not expect perfect credit and substantial amounts of disposable income from borrowers, but instead focus on the merits of the specific deal under consideration;
• Self-employment is not a problem for private lenders, whereas many banks view self-employment with more scrutiny and reluctance.

Advantages of investing in hard money loans include reliable cash flow (quarterly or even monthly distributions of interest) and risk mitigation, assuming deals are structured and underwritten conservatively.

Disadvantages can include a lack of liquidity and if the investor is unfamiliar with real estate investment and operations, loss of principal and/or the need for active management of non-performing loans.

Hard money lenders differ from bank lenders in that they often fund quicker, with less paperwork. Hard money lenders are sometimes called “asset-based lenders” because they focus primarily on the collateral for the loan, whereas banks require both strong property collateral and strong personal credit and verifiable cash flow.

Document requirements for hard money loans will vary depending upon the type of loan. If the loan is intended for an owner occupied property, personal income documentation will be required, and must exhibit the borrower’s ability to repay. This will mean tax returns and other income proof, along with asset proof. If the loan is non-owner, the requisite paperwork is much less intrusive. Many times, a rental agreements or estoppels may be sufficient for income. Other items include a loan application, credit report, a letter explaining use of funds and a letter explaining the borrower’s “exit strategy” (how the borrower plans to pay off the lender completely). Other loan documents that accompany a hard money loan include a Note and a Deed of Trust, Escrow and Title documents.

The “hard” in hard money lending refers to the higher price which is charged to borrowers both in terms of interest rates and higher loan origination fees.

A hard money lender is a private investor who makes loans secured by equity in real estate, typically charging higher rates than banks, and making loans that banks would not make. Additionally, private lenders tend to fund more quickly than banks and require less documentation.

A private mortgage note is very similar to a bank mortgage, except that it is funded by a private individual or entity, rather than a bank or a government agency, like Fannie Mae or Freddie Mac. Both private and bank notes are loans collateralized by real estate. Both have specific dollar amounts, repayment terms, closing costs,etc.

Unlike banks, however, private loans are not based upon a borrower’s fico score or debt to income ratios; rather, they are based upon the collateral – equity in one or several pieces of real estate. This “equity position” is the safety that protects the investor. Typically, the threshold is 60% loan to value, although on certain types of loans or properties, the ltv may go higher. Additionally, private loans are shorter than most institutional mortgages.

Should the private note go into default, the investor can initiate the foreclosure process, and can ultimately take back the property. And while Cushner Capital Group will always try to limit and mitigate this risk, there is always the chance that the property will go back to the lender.

The purpose of a Letter of Intent (LOI) for a hard money loan is to provide a quick means to be sure that both the prospective borrower and lender are on the same page. Although this document is not legally binding on either party, it serves to put the prospective deal “in writing” and helps to avoid any miscommunication or misunderstandings.

Trust deed investing is simply investing in loans secured by real estate. Most trust deed investments are relatively short term loans (maturity under five years, with many loans two years or less) made to screened borrowers with strong equity in California real estate. Banks are reluctant to lend to this market. However, these loans present a wonderful opportunity for investors seeking strong high yields and cash flow, secured by strong equity in a property and clear title.

At CCG, we lend on both commercial and residential properties. We lend on owner occupied “consumer purpose loans” for both 1st and 2nd mortgages, purchases and refinances. These loans do require a bit more paperwork, but we feel that owner occupied lending is too valuable to dismiss. We also provide the smaller owner occupied “high costs” loans, too.

We have the flexibility to lend on any type of California real estate, but mostly residential, apartment, commercial and industrial. Of course, our most requested loan is the non-owner or investor residential loan. We will go up to 70% loan-to-value on SFR purchase loans.

We do Commercial properties, including industrial, shopping centers, apartments and office buildings. Additionally, we provide financing for land. We will do flipper rehabs and construction completion.

The loan to value on all our mortgages will vary with location and risk.

Borrowers choose hard money loans when they are not able to provide all the numerous documentation often required by institutional lenders, or if time is of the essence and instructional lenders processing time frames are just too time consuming. But the most usual reason is due to the Borrower having poor to bad credit or possibly having a prior bankruptcy or a foreclosure that many institutional lenders don’t like. Or another reason might be income that can’t be proven to institutional standards. Hard money financing gives the Borrower a second chance and the opportunity to rebuild their credit together with obtaining the money they need.

A borrower should consider using a private money loan in situations when he or she has strong equity or down payment, but cannot get a bank mortgage. Sometimes, it is due to time or paperwork, other times it may be the condition of the property. Some instances it is the borrower’s credit; others, the banks’ difficult lending guidelines. The borrower must be willing to pay higher interest rate and fees, so that they can access to capital more quickly, without the extensive paperwork requirements to reach their real estate goal.

Hard money loans are typically funded by individuals or by funds from multiple wealthy investors. Individuals who invest directly into a single loan are known as trust deed investors. Many trust deed investors are real estate investors who invest to keep available capital working to generate a higher rate of return, rather than leaving the capital in banks, earning minimal interest rates.

Hard money lenders exist because there are deals and borrowers that make sense that banks will not finance. Banks and other institutional lenders that offer the lowest interest rates don’t provide the same combination of speed and risk aversion in their decision making process, along with quick access to capital.

Title insurance helps protect buyer/borrower who has purchased real estate against another party making a claim challenging the ownership of or lien against a property. The title insurance company will handle any issues that arise during the property sale or refinance, and if a competing claim of ownership is deemed legitimate, the title insurance company is responsible for payment of any fees to the claimant. The reason why hard money lenders insist on being covered under title insurance is to have the same protection as the borrower/buyer.