The Bank Says No! Now what?
You have a great lead, everything looks good, the deal is set to close, but at the last minute the bank says no. With today’s underwriting standards banks are forced to turn down transactions that they might have closed in the past. This could be due to issues with the property, the borrower’s credit, etc… but in many cases conventional lenders are focusing on straightforward transactions with no appetite for transactions a little out of the box. Fortunately your transaction is not dead just because the bank was unable to fund; the transaction could be a fit for a non-traditional lender (aka: Hard Money Lender, Private Lender, or Bridge Lender).
A non-conventional lender is radically different than a bank. Most are privately funded and therefore have greater latitude to structure a loan that works for the client. Hard Money lending is quite different than conventional lending. A hard money lender focuses heavily on the loan collateral as opposed to the borrower’s credit, etc… As a result, mortgage professionals need to adapt their plan to successfully close more hard money/ non-conventional loans.
Being a hard money lender myself and personally reviewing thousands of transactions a year, I’m always amazed at the number of loans that will never close. I’ve outlined six simple steps that every mortgage professional should follow in order not only to increase the number of loans closed, but also weed out loans that are duds.