Q. What is Hard Money Lending?
A. Hard Money Lending is Private Financing. Newmark Investment acts as a broker and brings together two types of individuals; Investors who are looking to earn a higher rate of return-vs-traditional methods, and a borrower who is looking to borrow or finance for a real estate project.
Q. What is a Trust Deed?
A. When a borrower is loaned money they typically sign a Note promising to repay the loan with interest over a certain period of time. A Trust Deed (also called a Deed of Trust) secures the Note against real estate. The real estate security is “backing” the Note and is what provides additional assurances that the loan will be repaid. If the borrower does not pay, the Trust Deed allows for ownership of the real estate to transfer to the lender. Then, the lender can sell the property to recoup their investment.
Q. Why is Private Financing gaining more popularity and traction in today’s market?
A. In regards to borrowing, banks and financial institutions are not in the lending state of mind. Part of the economic cycle is the constriction and expansion of credit. In this particular cycle we are at a point in time when traditional institutions have tightened lending requirements making it difficult to obtain a loan. In regards to investing, the financial institutions are not paying a rate of return that is favorable to depositors. Those yields are not high enough to keep up with the rate of inflation. These two factors are creating an opportunity for Investors, Borrowers and Newmark Investment and Loan.
Q. Do you see Hard Money Lending becoming stronger in the future as a result of the constrictions being placed on traditional lenders?
A. Yes! Government is adding more and more layers which restrict the traditional lenders ability to lend. Even as the market improves, these restrictions will remain in place. Hard Money Lending has complex government restrictions as well, but because the decision maker is much closer to the transaction, they have the ability to capitalize on this opportunity.
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