Hard Money the Mortgage Alternative

Hard Money the Mortgage Alternative

Now that the Sub-Prime market for mortgages on home purchases has basically collapsed, we’re back to the situation in the ‘80’s when, if you couldn’t qualify for a black and white conventional mortgage, your only alternative was hard money. Quite frankly, now that I’ve been in this business awhile, I’m shocked at the high LTV’s and lack of underwriting that went on in the Sub-Prime hay-day. It seems to me that the Wall Street guys actually got in to the hard money business and rationalized away the risk with some fancy mathematics based on some quant’s calculus fever dream. The combination of easy money and low rates was certainly a recipe for disaster.

Considering the rigor with which we at Fairfield analyze the risks, the train wreck the sub-prime mortgage industry is in now seems like it was inevitable. It’s my opinion that the investment banks on Wall Street tried to institutionalize the art of what we do at Fairfield. You just can’t do that. There are too many unique factors that can spell disaster for a non-traditional loan. Hard money loans have to be carefully and skillfully screened to be a successful investment. Most importantly, there was no cushion in the LTV to absorb the sins that were being committed.

So we’re back to where we were in the ‘80’s. Now, if you have a client that can’t get a conventional mortgage, hard money is really the only option. As before, the game is really now about equity. You should be preparing your borrowers for higher rates and fees, lower LTV’s and shorter terms. For creative ways to keep your LTV down see the article, “Creative Funding”, here:


The max term we can do without seriously drilling down on your borrower’s ability to re-pay is 12 months for new purchases (we can go with a longer term or do refinances, but that requires more underwriting on the borrower’s ability to repay). This may be enough time for your borrower to get their finances in order. In situations where your borrower has equity and the ability to do debt service, but may have challenged credit or is just coming out of a bankruptcy, we can help. See the article, “Off the Beaten Path” here:


In short, we’ll look at any worthwhile deal.

I’m glad we’re here to fill the gap. Welcome back to hard money. Contact me and find out how you can give your borrowers an alternative.

Richard Sundvall
Senior Loan Coordinator
Fairfield Financial Services, Inc.
971-227-1023 voice