With the influx of hard money loan requests, I get a lot of people calling asking for a bridge loan. Often times, however, they are looking for a bridge loan on the advice of someone else and don’t really understand what a bridge loan is. Many times, they are not actually looking for a bridge loan at all!

A bridge loan basically a band aid type of loan. It is a short term fix for a short term problem. It bridges the gap between two more permanent types of financing.

One scenario where a bridge loan could come into play would be a construction completion type of project. These are common in the market today, as the real estate downturn left many projects started but not finished. In addition, the market took a lot of construction financing options off the table.

It is this situation where hard money bridge loans can be of good use. The purpose of a hard money bridge loan in this scenario is to provide the capital to complete the construction of an unfinished project, and upon completion the borrower is expected to take the bridge loan out.

By being able to complete the construction, the borrower may alleviate the issue that has precluded them from being able to obtain financing. Namely the fact that there is construction that needs to be done. By having a finished product, the borrower is then able to secure long term financing, often at better terms than the hard money bridge loan carries.

The other take out would be to sell the project at completion to take out the bridge loan. Either way, a bridge loan is not meant to be a lasting solution, only a temporary fix.

If you are in need of a hard money bridge loan, please feel free to call me directly today to discuss your options!

There are two main instances when you will have a dispute status on your credit report.  The first is if you (the consumer) initiated the original dispute directly with the creditor.  If this is the case in your situation, you may contact the creditor and request that their dispute be revoked and that each of the bureaus be updated immediately (usually done through the creditor’s online system).  Depending on the individual creditor’s policies, this may or may not happen that quickly and easily, but it could be the quickest way to get the dispute status removed and reported to all three bureaus.  Again, this would only be an option if the dispute was originally initiated with the creditor, not the credit bureau.

If you initiated the original dispute with the credit bureaus directly through their online interface, the fix is not the same.  If this is the case, you should now be able to contact each bureau online or by phone to request that the disputed status of a specific tradeline be removed.  You have 30 days to initiate such an action online from the date you access your credit file. 

If you do not recall how the dispute was initiated but you still would like to revoke the dispute with the bureaus directly, then you should access your file free from www.annualcreditreport.com or the bureau’s website and proceed with disputing the ‘disputed’ status of the tradeline(s).  This may include contacting the bureau’s consumer assistance center at the number displayed on their bureau report.

Here is a sample dispute letter that you can use as a template for requesting a disputed status on a tradeline be removed:

Re: Revoking disputed status on accounts

To Whom It May Concern:

I am currently in the process of obtaining a home loan and have recently been made aware of accounts on my credit bureau file that are currently in a disputed status.  This is causing a delay in the underwriting of my loan and I wish to have the disputed status removed on the following tradelines:

Account Name:

Account Number:

I appreciate the timely fulfillment of this request as the status of my home loan trasaction is contingent upon removal of this disputed status.

Sincerely,

_______________________

Your Name

Many banks and institutions have tightened up their standards.  The debt coverage ratio required has gone up, and values have dropped as vacancies have increased and rents, in general, have slid.  In addition, the cap rate used to value these properties is climbing.

All of these issues taken together makes small commercial loans more difficult than ever to obtain.  In these financial times, one option that could make sense is working with hard money to secure your small commercial loans. 

There is still capital available through hard money lenders, and although the valueation of the property is essential in the underwriting of small commercial loans, the strict debt coverage ratios that many institutions are imposing on borrowers are not.  Where a bank may require a DCR of 1.25 or better, many hard money lenders will make their small commercial loans with a DCR of 1, sometimes less if there is an exit strategy and the loan is needed only for bridge purposes.

 In addition, working with private investors can allow for greater flexibility and more creative opotions for your small commercial loans.  One example of this is the ability to cross collatarlize other property.  By bringing additional properties to the table, often times borrowers are able to overcome value issues of the subject property.

You can learn more online about commercial loans, or you can contact me directly today.  My name is Chris Goulart, and I can be reached at 877 462 3422.  I am happy to answer any questions you may have regarding small commercial loans, and can talk with you about your options, whether through hard money or institutional lending sources.

If you are going to attempt a loan modification on your own, it is important to document everything as you proceed.  A simple call log sheet can go a long ways if you need to reference something you were told months ago.  It can help keep you organized, and also allows you to reference what you have been told without having to second guess yourself.  In addition, if your home does go to foreclosure, it can document all of your efforts to negotiate with your lender.  You will most likely be talking with a different person every phone call, having a record of what you discuss with who is very important.

You should be talking with someone from the loss mitigation department at least once a week if you are attempting a loan modification.  Each and every time you should document the date and time of the call, who you spoke with, the details of what you discussed and what instructions you were given.

For example, if I called in on December 1 at 3pm and spoke with Cathy, who told me that my file was being reviewed by a negotiator, but I needed to send in updated financials, those are the notes I would make in my call log.  You can make a call log pretty easily.  It does not have to be fancy, feel free to download and use my Sample Call Log. I have uploaded a sample in PDF format that you can download and print out.  Whether you use this form, or simply write the information down on a blank sheet of paper, be sure to keep a call log.

Check back in, I will be posting more forms to use and information to help those seeking a loan modification.

Sample Hardship Letter

Loan Number:

Name:

Property Address:

Phone Number:

To Whom It May Concern:

We are writing this letter to address the reasons that caused us to fall behind on our mortgage and ask you to work with us on a loan modification.  We do not want to lose our home, but unfortunately circumstances outside of our control have put us in a position where we cannot make ends meet.

The reason we have become delinquent on our loan is (briefly outline the reason, keep it to a single paragraph if possible.  If you lost a job, had a drop in income or some other hardship, this is where you put it on the table. Talk about when the hardship occurred and if it is permanent or temporary).

We have resolved this situation by (reason here – lost my job, was out of work for 3 months, took a new job, etc.) and we feel that a loan modification would benefit us both. We would appreciate if you can work with us so that we may remain in our home.  We are requesting (ask for your preferred solution, rate reduction, fixed rate for 30 years, principal reduction, delinquent balance added to the loan amount, short sale, deed in lieu of, etc.).

We look forward to working with you and appreciate your time and consideration.

Sincerely,

Borrower’s Signature

Date

Co-Borrower’s Signature

Date

The focus of this post, and a few more to follow, is how you can do your own loan modification.  There are some instances when you might need the help of one of these loan modification companies, but in my opinion, most times you can accomplish the same results by working with your lender directly.  The first thing you should do is get the contact information for the loss mitigation department of your lender.  Typically you should be able to call the customer service number on your mortgage statement and ask for the phone number.  This is the department you will be talking with.

Once you have contact information for the loss mitigation department, you should gather up some pertinent information and paperwork.  You will need income information.  Your most recent paystubs if you are W-2, an up to date, signed and dated profit and loss statement if you are self employed.  You will also need a financial worksheet.  This is where you outline all your expenses for each month.  Credit card payments, mortgage, utilities, clothing, food, medical, etc.  It can be helpful to gather all of your bills so you are accurate and do not miss anything.  The final thing you want to have is a hardship letter.  This is going to be the face of your request.  In this letter you need to outline why you are asking for a loan modification, and what solution you are requesting.

This letter is important, so take a little time in putting it together.   Your lender is going to look to see if you can afford the existing loan.  If you cannot, they are going to look to see if you can afford a modified loan.  If you lost your job, have no income and are asking for a loan modification, it could be tough.  But if you lost your job and got a new one that pays less, that shows that you have income coming in, and if your loan were to be adjusted, you have the ability to make payments on the new loan.  They do not want to modify your loan, only to have you back in the same situation 6 months from now.

The second part of this letter is outlining what you are asking for.  Do you have an option arm or neg-am loan that is adjusting and just want a 30 year fixed loan?  Is your interest rate high, and would a lower rate allow you to make payments?  Do you want to short sell your home to get out from under it with no foreclosure ding?  Would you like to give your lender a deed in lieu of?  Decide what you want and ask for it.

In general, I believe you can take the bull by the horns and work with your lender on a loan modification directly.  With the proper tools and a little information, you can be successful in modifying your loan.  Take a look at this group, they have a loan modification package that gives you the information you need to do this yourself, saving thousands of dollars upfront.  In addition, they have been around for a while, and have been doing modifications for their clients even before this current downturn.  Many of the loan modification companies you might hear about have just sprung up to take advantage of the market.  You can also take a look at this posting for a bit more infromation on a  do it yourself loan modification.  Finally, check back in here as I will be writing more posts on loan modifications as time permits.  I will also be putting together some forms that can help you and some contact information for various loss mitigation departments of banks.