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Private Hard Money Lending

“Your success is our success.”~ Trent Dalrymple

Director, Investor Relations – Metro Mortgage Investments

Metro-Mi.com

26711 Woodward Ave.Suite 301Huntington Woods, MI 48070

www.Metro-Mi.com(248) 547-3006

What is Hard Money?

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• A hard money loan is loan where a borrower receives funds secured by real estate. Hard money loans are typically issued at much higher interest rates than conventional loans.

• Many hard money mortgages are made by private investors, generally in their local areas.

Source: http://en.wikipedia.org/wiki/Hard_money_loan

Is it Regulated?• Mortgage Brokers, Lenders, and Servicers Licensing Act – MCL 445.1651• Mortgage Loan Originator Licensing Act – MCL 493.131• Secondary Mortgage Loan Act – MCL 493.51• Consumer Financial Services Act – MCL 487.2051• Consumer Mortgage Protection Act – MCL 445.1631• Mortgage Lending Practices Act – MCL 445.1601• Regulation X – RESPA• Regulation Z – TILA• Regulation B – ECOA• Fair Credit Reporting Act• Various FTC Rules

– Safeguard Rule– Red Flags Rule (ID Theft Prevention)– Risk-Based Pricing Rule

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"Mortgage loan" means a loan secured by a first mortgage on real property located in this state and used, or improved for use, as a dwelling and designed for occupancy by 4 or fewer families or a land contract covering real property located in this state used, or improved for use, as a dwelling and designed for occupancy by 4 or fewer families.

Why Hard Money?

• Faster Process• Flexible• Lend using ARV• Leverage Equity• Higher Debt Ratio• Distressed Property

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Leveraged Investing

Purchase Price of Property 30,000$ Cost to Repair / Rehab 15,000$ Appraised Value 90,000$ Max Loan Amount 45,000$

Loan Principle Balance 45,000$ Closing Costs & Fee 6,750$ Property Tax Impound 2,500$ Monthly Payment 675$ Total Cost of Loan* 59,650$ *assumes 8 months of Interest

Sale Price 90,000$ Principle + Costs (59,650)$ Profit 30,350$

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Your out of pocket costs:

$6,750 – Closing Costs$2,500 – Property Tax Impound$5,400 – Monthly Interest

$14,650

Return on Investment (ROI)

Purchase-Rehab Loans• Borrow against the

projected After Repair Value [ARV]

• Purchase Price + Repair Costs

• Setup Fund Control • Release as Repairs

Completed

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Property Requirements

• Brick• 3 Bedrooms +• Basement• Garage Required• Pride-of-Ownership

Neighborhood

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Appraisals• Specialized Appraisal

– List of Required Repairs by Licensed Contractor

– Predominant Sales• Company Approved

Independent Licensed Appraiser

• Desktop / Full Appraisals

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Borrower Profile• Home Owner• Experience with

Property• Ability to Repay• Credit History

– NO Recent Foreclosures– NO Current Bankruptcy– NO Consistent Negative

Issues

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Be Prepared• Appraisal• Loan Application• Credit Report• Income Documents• Title Commitment• Purchase Agreement

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Be Prepared

• Cash into Project– Minimum 10%

• Realistic Exit Strategy– Extension Available

• Property Taxes– Escrowed / Impounded

• ACH Payments– Automatic Withdrawal

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Michigan Programs & Fees• Real Estate Investor

– Interest Only• Foreclosure Rescue

– Homeowners– Amortized

• Seller Holdback– Lien of Interest

• Application Fee• Appraisal Fee• Interest Rates

– 14% to 18%• Closing Costs

– 6 to 10%– $3,000 (min)

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The Corporate Team David DiMeo, President & Broker • Over 15 years experience in providing privately funded mortgages• Business Development / Service Partner Agreements• Loans Programs / Underwriting Guidelines• NMLS# 171942

Trent Dalrymple, VP Investor Relations• Over 25 years experience as private mortgage professional• Loan Origination / Account Management• Training / Public Affairs• NMLS# 166179

Anne Pancost, Quality & Compliance Officer• Over 20 years experience in banking industry• Senior Internal Auditor / Certified Bank Auditor• Office Manager

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www.metro-mi.com