Beware of Identity Theft When Getting Quotes as a Real Estate Investor! Verify your Lender!!!

About 3 years ago, there were a number of posts on Facebook that stated the lender had money at 4% available to anyone.  As a loan broker, I’m always looking for inexpensive money for my clients.  When I made contact with one of the supposed lenders their requirements were rather interesting.  The key to telling me they were scam artists were two things: The need for a utility bill from the borrower and a copy of the borrower’s driver’s license. 

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Fast forward to today…  these same scam artists are at it again.  They are a bit more sophisticated now but they are easy to spot.  These lenders pose as private money lenders on LinkedIn.  They ask for a general summary of the project and even an executive summary of the project the borrower wishes to fund.  They even have websites that make you think you’re dealing with a real lender.  One that I began to research even had testimonials.  Fantastic, I was getting somewhere, the lender had people saying they were legit! 

Fake websites often look like legitimate and trustworthy sites to make people more apt to provide their personal information. Scammers may seed the website with malware that infects the victim’s device and harvests personal or financial information.

It fell apart when I started calling some of the people that I knew, a small world of loan brokers, that were listed in the testimonials.  The specific testimonial listed a former member of my contact’s company as having written the testimonial.  They listed another person in the testimonial but my contact had no idea who the lender was. I researched further to find the person mentioned in the testimonial.  Fortunately, he was still in the industry and was able to be located.  He and I had a few pleasant email exchanges which led to the fact that the testimonial was lifted from a legitimate lender, another one I work with, and edited to change the name of the lender. 

For cyber thieves, your personal information is a goldmine. For example, your (user) name, last name, email addresses, phone numbers, passwords, banking information, credit card details, Social Security number, medical records – and so forth.  Your personally identifying information could include your full name, home address, email address, online login and passwords, Social Security number, driver’s license number, passport number, or bank number. 

Then came the email from the questionable lender.  Please have your client fill out our application. 

  • Name 
  • Address 
  • Sex 
  • Utility Bill 
  • Driver License 

It was the same group from 3 years ago remade into a somewhat real lender. 

Scammers often use phishing emails to trick victims into providing personal or financial information. Phishing emails can be deceiving in that they may appear to come from a known or trusted company, such as a bank or an online retailer, and use various tactics to get the victim to click a link or open an attachment.  They are trying to steal your identity!  Identity theft occurs when someone uses your personal identifying information and pretends to be you in order to commit fraud or to gain other financial benefits.

With enough identifying information about an individual, a criminal can take over that individual’s identity to conduct a wide range of crimes. For example:

  • False applications for loans and credit cards,
  • Fraudulent withdrawals from bank accounts,
  • Fraudulent use of telephone calling cards or online accounts, or
  • Obtaining other goods or privileges which the criminal might be denied if he were to use his real name
     

Please be wary of any lender that wants the type of information requested above and is offering interest rates that are substantially below market rates. 

Call us today to find out more about all our options. If you need funding, apply now.   

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http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Don’t Self-Sabotage as a Real Estate Investor, Rates are RISING!

Rates are heading up rapidly! Since 9/1/2021 when the best 30yr fully amortized loan interest rate was 3.625%, there has been a steady increase.  Within the past 7 days, the same institutional lender has increased its rates to 5.750%, the lowest possible rate available.  This is a 2.125% increase in approximately 6 months.  Interest rates will remain volatile during this period of inflation.  As the Fed works to rein in inflation by adjusting the rate upward, we will continue to see these increases.

What can be done to mitigate these increases?

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When your Loan Officer requests Documents please be expeditious in sending them.  We are seeing investors delay signatures, sending documents, and poor response times which have led to as much as a 1.00% to 1.25% increase in the interest rates.  Investors want to see the mailbox money flow in with a minimum of effort, that is understandable.  But when it comes time to purchase or refinance a property, please make sure that your entity documents are in order.  This means signatures are where they should be (the biggest issue we see today), That a clear chain of ownership of the entity is evident.  Lawyers like to hide the ownership trail to minimize exposure to risks.  Lending institutions want to know exactly who they are lending to, minimal smoke and mirrors make the organizations with the money happy.

Some lenders offer a rate buy-down.  The basic way this works is that by paying an increase in the origination points to the lender the interest rate can be lowered.  Generally, this is a ratio of points to interest buy-down.  An example could be:

The ratio is 0.333% per Point.  The maximum buydown is 2 points or 2 times the buy-down points offered.

Interest7.00%7.00%7.00%
Origination Pts0%1%2%
Buy Down0.000%0.333%0.667%
New Interest Rate7.000%6.667%6.334%

There are other lenders that offer a similar buy down at a rate of 0.5% maximum for an increase in the lender’s origination points of 1.5%.  This buy down can be bought in 0.125% increments if that works for your program.

BUT WAIT THERE IS MORE!

We do have better news if you are doing a BRR strategy and not just a regular refinance and are open to a 5 or 7 year ARM. Call us today to find out more about all our options.

If you need funding, apply now.   

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http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Updates to our Loan Offerings – More for you as a Real Estate Investor

We are a direct lender and financial intermediary, which gives us the opportunity to place the most competitive financing options in the market.  Below is what we specialize in.  We look forward to winning your business and creating a long-term relationship: Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments. Here are more details of our core lending products.

1. Fix and Flip Loans – up to 90% Of Purchase with 100% of Rehab, experienced, or first-timer investors

2. BRRRR – Buy, Rehab, Rent, Refinance and Repeat loans are available.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

3. Rental Property Loans – Purchase – Refi – Cash Out.  SFR 1-4 units and AirBnB properties.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

4. Ground Up Construction Loans

5. Portfolio Loans for SFR – 2-4 units and Multi-Family

6. Bridge Loans – Loans to Pay off current Lender – 1-2 Year Loans.

7. Multi-Family Loans from 5 doors to 300+ doors.  Value-Add Purchase, Turn-Key Purchase, Bridge, New Construction, Agency and non-Agency loans

8. Commercial and Mixed-Use Properties

9. Haz. Ins. Co you can use. https://affiliate.nreig.com/RichardTurner­

We are also very excited to be working with a new lender that will provide funding for the BRRRR investment concept.  Basically, the loans look like this:

  • LTV – up to 88% of Cost / 68% LT Market Value
  • DSCR – 1.20 based on Market Rents (1.30 if less than 3yrs rental experience)
  • Experience – Min 5 flips or rental / 5yr look back
  • Loan Terms  – 7 yr  (5yr Fixed+2yr Floating)
  • Interest – Intro Rate 4.9% (increases with credit below 740, max 5.8%), First-year – no interest payments (rolled into loan principal)
  • Loan Terms – 12yr (10yr Fixed + 2 yr Floating)
  • Interest- Intro Rate 5.2% (increases with credit below 740, max 6.1%), First-year – no interest payments (rolled into loan principal)
  • Origination Points – 3% (2 to lender + 1 to us)  need to get a Broker/Client Agreement at 1%
  • Prepayment – Step Down 3-2-1  (No PPP if Origination Points Increased by 1%)

The lender will work with the following background issues:

  • Litigation with another Lender
  • Bankruptcy (10yr lookback)
  • Foreclosures (since 2012)
  • Delinquency with suppliers
  • Outstanding RE Liens
  • RE Loan Delinquency

This lender is geared up to work with contractors and investors.  They understand the issues they come into and have a system that helps to prevent further erosion of the borrower’s track record or credit.

One of their claims is that 95% of applications pass thru the system to get a loan.

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

If you need funding, apply now. I am working online with the rest of you.  

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http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

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Deferment Fog

Although real estate agents are seeing increases in inquiries about homes in the suburbs compared to the same period last year and house sales are up slightly in the second-home market, consumers are not applying for as many loans and banks are not lending as much.

Millions of Americans, 29 million, filed for unemployment last week for the first time according to Investopedia.com, slightly more people than expected, but less than the previous week.

As they lost their jobs or were forced to close their businesses, homeowners who could not make their mortgage payments asked their mortgage servicers for permission to pause their payments. Once a rare occurrence, the number of accounts in deferment, forbearance, or some other form of relief rose to 100 million between March 1 and the end of May according to today’s Wall Street Journal article by Anna Maria Andriotis.

For lenders and borrowers, these are difficult times because the coronavirus stimulus package includes a provision that says lenders that allow borrowers to defer their debt payments cannot report these payments as late to the credit reporting companies, making credit scores an unreliable marker of how a borrower is doing paying their loans back.

Banks are pulling back on credit because lenders are having a difficult time determining if applicants’ credit scores and credit reports reflect their true levels of risk. Not only do they not know who to lend to, but they cannot tell how much their loan losses will be if the economy remains a mess.

Across the board, lending standards have been tightened. Even mailed credit card solicitations fell from 316 million in February to 74 million in May. (Wsj.com)

It takes more work to find borrowers who will pay their loans back. A lender will have to sort through more data. Some lenders are asking borrowers for permission to look at their payment history on accounts not appearing in their credit report and to analyze their banking accounts.

If you need funding, apply now. I am working online with the rest of you.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References

Andriotis, June 29, 2020, Flying Blind Into a Credit Storm’: Widespread Deferrals Mean Banks Can’t Tell Who is Creditworthy, available online at https://www.wsj.com/articles/flying-blind-into-a-credit-storm-widespread-deferrals-mean-banks-cant-tell-whos-creditworthy-11593423001?mod=hp_lead_pos5

Fluctuating LTV

The loan-to-value (LTV) ratio is the amount a borrower can borrow from a lender compared to the appraised value of the property that he or she wants to buy. The LTV determines the amount of a down payment a borrower has to supply from his own pocket to invest in the property.

Loan-to-Value ratio = Mortgage amount ∕Appraised value of the property.

For example, if the lender offers a loan at a 90% loan-to-value ratio, the borrower must supply 10% of the total cost of the purchase. In a fix-n-flip loan the same is true, the lender that supplies up to 90% (for example) of the home purchase price, requires the borrower to provide the other 10% of the price.

The Coronavirus pandemic has changed things rapidly including the market value of homes, thus affecting the LTV ratios lenders depend on. Please call for the most up-to-date loan-to-value ratios on our loans for your upcoming projects. 512-213-2271

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Default

If a borrower defaults on a home loan, which is more likely to happen if they do not have much of their own money in the home, the lender takes back the home and sells it to get back the money they lent. Market fluctuations can cause lenders to lose money if the value of a house goes down and the borrower defaults on the loan. The value of the home may be less the amount of the loan. The coronavirus pandemic may make home prices goes down, but that is not certain and may not be true in all locations.

Equity

If the borrower had equity in the home and defaults, then the borrower loses the equity they have in the home because the lender takes the property and sells it to recoup their investment and expenses as quickly as possible.

Equity is the amount of money that would be returned to homeowner if the asset is liquidated (sold) and all debts are paid off. It is in a home owner’s best interest to sell a home before they default on a loan and pay the loan off if possible both so they can get their equity out of the home and so that they can keep their credit history in good shape.

FICO Score Requirements

The FICO score required on loans relates to the buyer’s credit history. It reflects how often they have been late or defaulted on loans in the past. Before the coronavirus pandemic set our lives, marketplace, and economy into a spin, REI Capital Resources required a FICO score of 650 on a hard money loan with a term of up to 24 months. Many people have lost their jobs and their credit scores have suffered. Watching the unemployment rate go up, lenders across the country have tightened up their FICO requirements and these requirements are changing daily. Please call me for our latest FICO requirements. 512-213-2271.

Selling to Avoid Foreclosure

Owners in default or facing default will sometimes take less than the market value for a house to avoid foreclosure. They may settle for only getting part of their equity back, reasoning that some is better than none. None is what they will get if they go into foreclosure and the lender takes back the property and sells it for the balance owed on the loan. The borrower may even give up all their equity to sell the house before defaulting to keep their credit history intact and their FICO scores high.

Buying Opportunity

The distressed homeowner’s situation becomes the buyer’s opportunity. The homeowner needs help to retain their high FICO score and some equity, and the fix-n-flip buyer needs to purchase a property for the lowest price. It can be a win-win deal.

As a direct lender, it is my job to help you get a purchase and rehab loan as quickly and as easily as possible. The perfect fit is still out there. Call me though for the most up-to-date information.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send me an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Numbers: Prices, Percentages, Points

Despite the volatility of the stock markets and the Texas weather, no matter if it is raining, blowing, or baking, even if I have to walk uphill both coming and going, in a “snownado,” I am here to help you find ways to put your money and your time to good use making more money in big or small, short-term or long term, real estate investment adventures.

I have several loan programs to offer.

 

 

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Patrick@reicapital.cash

512-213-2271

 

 

 

 

 

 

A Boost for the Credit Score

News from Wall Street Journal reporter Anna Maria Andriotis this week tells us that the major credit reporting companies will soon be adding data from consumers’ utility and phone bill paying history to their credit reports. This is a move that she says will likely boost the credit scores of millions of people and increase traditional loan approvals. According to Andriotis, Experian will start factoring in this payment information early next year.

Consumers who have low or no scores because they have no history of borrowing and subprime borrowers whose scores are currently lower than what some lenders require will likely see their credit scores go up.

Some of these changes are coming about because of pressure the banks themselves have placed on the credit reporting industry and its regulators because they want to make more loans.

To make this work, people will have to opt into the new program and link the bank accounts they use to pay their phone and utility bills to Experian, allowing the company to track their monthly payments.

The credit score shows a borrower’s ability to responsibly use and pay off credit cards and loans, and in the future other types of bills.

The five factors that are most important in determining a credit score according to Thad Merrill are

an individual’s payment history,

the amount of outstanding balances,

length of credit history,

the types of accounts, and

the number of recent credit inquiries.

Factoring in utility and phone bill payment histories will help with at least the length of credit history.

If you are interested in borrowing for real estate investment, hard money lenders offer alternatives to those who have bad credit. They can also offer faster access to financing with less stringent eligibility requirements. However, investors may pay a higher interest rate over a shorter period. Hard money lenders are semi-institutional lenders who are not required to adhere to the policies and regulations that are required of banks. These requirements really tightened up after the 2008 financial crisis. If  traditional lenders are looking to lend more money, it might be because they think the good economy “still has room to run.”

Good economy or bad economy,  it is always a good idea to improve your credit score, particularly if you want to invest in real estate.  A good credit score opens up more financing options and will speed up the loan approval process, and you won’t miss out on that great deal.

Patrick@InvestorsLendingSource.com

512-213-2271

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Reference: Andriotis, AnnaMaria, WSJ December 18th, Want a Better Credit Score? Soon, Your Cellphone Bill Could Help.