Why Do Hard Money Lenders Fail?

This vital pillar of our economy almost vanished when the economy and the housing market tanked about four years ago. Private lenders were left holding large inventories of real estate whose values were eroded by between 30% and 50%. Consider this scenario: A $200,000 mortgage loan balance, originally secured by a property valued at $285,000 (Loan to Value 70% [LTV]), was suddenly under-secured as the securing property value dropped by 40% to $171,000 (Loan to Value 117%). Conventional banks suffered somewhat similar consequences, albeit on a smaller scale. The difference was due to the credit analysis methods that were practiced prior to the collapse of the property market. On one hand, conventional lenders subjected credit applications to more stringent analysis that included borrower's credit history, character, income, collateral, ability to repay, stress testing, terms and economic conditions. On the other hand, Private lenders or hard money lenders, as they are popularly known, were mostly concerned with the value of collateral, paying very little attention to the borrower's ability to repay. This has now changed to a large extent. Many hard money lenders are applying more or less similar credit underwriting standards as the conventional lenders. The only setback for most of the hard money lenders now is lack of prudent underwriting skills. However, the good news is that they can outsource the underwriting role to professional loan underwriters, right here in the United States, at an affordable cost. Remote loan underwriting firms, whose teams consist of highly experienced ex-bankers, are well positioned to provide the most current loan underwriting techniques in the industry.

Here are a few roles that a hard money-lender can outsource to improve delivery times and credit quality:

1. Creating loan package - Application (Fm. 1003), Income, Credit, Asset documents, Policy of Title Insurance and Property Profile Report

2. Gathering and reviewing title information

3. Ordering and reviewing an appraisal

4. Loan underwriting for a private investor

5. Creating final documents and coordinating settlement or closing

Prudent credit underwriting, whether for conventional lending or hard money lending, should follow these simple underwriting guidelines:

1. Know your customer, character and credit history

2. Read the market conditions well

3. Ensure that a borrower has a reasonable stake in the deal

4. Understand borrower's indebtedness and sources of income or losses

5. Obtain adequate and easy - to- sell collateral

6. Test the borrower's ability to repay the loan

7. Impose simple and achievable loan conditions. Be aware of the prevailing environmental and economic conditions.

Franc Jo is a Senior Underwriter at Loans Underwriting LLC, the leading provider of outsourced Credit Underwriting support to lenders and funding solutions consultant to small businesses throughout USA. He may be reached at 3330 Pkwy Suite 324-178 Acworth, GA 30101, Phone 1-800-858-8593, and Website: www.repaircash.com

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Do All-Inclusive Holidays Really Save You Money?

How can you give your family a wonderful holiday and save money while you do it? Over recent years, all-inclusive package holidays have become increasingly popular. The attraction has been in the potential savings that can be made from not having to spend additional money on food, drinks and entertainment. The question is; do all-inclusive holidays really save you money?

Initially, all-inclusive holidays were part of the thrill of a long-haul package holiday to places like the Caribbean, Mexico, or the islands of the Indian and Pacific Oceans. Now they are a standard offering from even the most budget holiday destinations. Holidays to Turkey, Spain and Greece are increasingly being offered with all-inclusive options. They are being marketed as the best ways to save money on a family holiday. So, is it a marketing ploy or are there real savings to be made?

An all-inclusive holiday means the inclusion of all food, drinks, entertainment and accommodation. So what you are getting is everything. For a family of four, paying additional costs for several meals a day, drinks, and additional activities can take its toll and add approximately £200 per day to a credit card bill! So an all-inclusive package does appear to be a much cheaper, money saving option. But always read the small print.

All-inclusive very rarely means all you can eat whenever you want to eat it. These package deals usually involve breakfast, some form of lunch and an evening meal at set times during the day. They are usually buffet style meals from set menus of local produce. Eating from an a la carte menu will most likely involve an additional cost. Likewise, free drinks will usually mean a selection of locally sourced drinks, and it will not always include the standard choices of alcoholic and soft drinks you and your family may normally choose like spirits.

Before you book, check the information and feedback about the standard of local cuisine that is provided as part of the package. And remember that it is usually local cuisine so if you and your family have particular tastes or dietary needs they may not be catered for. Also find out what drinks actually are included. Remember, going all-inclusive will only be a saving if you actually don't need to pay for anything else.

This is also true for the free entertainment that is offered. Check what this is. There may be additional charges for kids' clubs, water sports and organised tours. The included entertainment tends to be what is made available within the complex like evening dances or discos, games, cinema rooms and so on.

Many families want to explore and experience their holiday destination. One complaint of all-inclusive holidays is the feeling of being stuck to the same routine every day for two weeks. People like to explore, and visit different restaurants, bars and attractions. If this sounds like your family, maybe buying an all-inclusive holiday may not prove to be as much of a saving as you had hoped.

If however, all you want to do is spend time on the beach and relax within the complex as the kids play in the pool, it may be the perfect way to enjoy the luxury of a two week holiday for a reduced amount of money.

The best advice is to read the terms and conditions of the all-inclusive package carefully. Calculate approximately how much your food, drinks, and entertainment will cost you, and compare the prices with a non-inclusive holiday. You may find that there are many family package holidays at half board that will save you just as much money while giving you and your family the flexibility to enjoy, explore, and fully experience your holiday resort outside of the hotel complex.

The author of this article is a customer service manager at www.loansholiday.com. He is also a staff writer for the company.

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