The following info is courtesy of Athas Capital. Visit them for your hard money loan needs!
With the Dodd Frank bill having no chance for repeal it looks like we will have to live with their new purposed rule changes. Most of these new rules that will affect our industry center around Owner Occupied residential consumer deals. These changes will start in January 2013!!! So we only have one more month to close Owner Occupied hard money deals before the hard money world is turned upside down. Some of the changes that will wildly affect the “Hard money” space are listed below.
-NO financing ANY lender or broker points within the loan! Yes this means that the borrower will have to pay the points out of their savings or finance it on a credit card….no joke!
-NO Prepays protection will be allowed to the lender! This will not allow Athas to do loans for no points, allowing the already limited points that you can charge all to go to the broker!
-No Balloon payments will be allowed! This will make the vast majority of lenders exit the O/O Hard money space because they are used to short-term commitments and forcing them into 30 year fully amortized loans! All the hard money brokers that use private investor money will not be able to talk their investors in to a 30 year loan.
-All borrowers that do still want to get Hard Money/Alternative lending loans on their home will be FORCED to attend Consumer counseling set up by HUD. This will make just another barrier to entry to obtaining financing on their home!
So these changes that are right around the corner will wildly affect the cost of capital to the consumer in a negative way. So if you have or had a borrower entertaining using Alternative lending to get them in to their home of their dreams or getting the capital they need……submit your loan request immediately and plan on closing the loan in December!
Athas is committed to staying in the O/O alternative lending business after the Dodd Frank rules are implemented in January, but closing an O/O loan this month will be easier and more profitable for you but only for the next 30 days! So get your O/O financing before the cost of capital goes through the roof!