It’s Official: We Specialize in High-End, Luxury Residential Loans
It didn’t happen on purpose, nor did we have any plan to carve out a niche in the residential marketplace for hard money loans. However, as time has gone on (now about 5 years) it’s become clear that plenty of mortgage brokers consider us a go-to source for private loans on high-end, luxury residential real estate. When you examine our lending philosophy and program parameters it seems like a logical fit: high net worth borrowers that require equity based loans on real estate valued at $750,000 or greater. However, it was impossible to predict the amount of demand that would exist for such loans and we’ve seen it increase exponentially in the recent past. We believe that there are at least several reasons why this is the case:
1. No W-2? No loan for you!
As banks tighten their lending parameters they’re gradually squeezing out more and more self-employed individuals. Unfortunately, high net worth borrowers tend to make up the largest percentage of the population that doesn’t receive a W-2. However, many of these borrowers still have plenty of income whether it be from residual income streams, asset sales, or other capital gains that don’t show up as income that a bank will accept for qualification purposes. We find that many self-employed, high net worth borrowers are now fishing in the private mortgage pond for loans on luxury residences, and they’re doing so for a variety of reasons that are often related to businesses that they own. It just so happens that their largest source of equity is in their nest egg – an estate home.
2. Mumbo Jumbo
When dealing with high end luxury real estate you’re typically always dealing with Jumbo loan amounts which means that both pricing and qualifications change at the bank. However, it’s not so with private money. Jumbo loan requirements are pushing more and more borrowers out of the traditional lending market and into a void that only private mortgage lenders can fill. Most private mortgage lenders don’t have secondary market qualifications to adhere to, so the loan amount is of no consequence. In fact, most private mortgage lenders would prefer to make larger loans rather than a bunch of small ones.
3. Regulatory Wrenching
As mortgage regulation continues to increase, the pressure that’s mounted on lenders of all kinds has grown to a new level. Unfortunately, a lot of that pressure has been put on private mortgage lenders that once filled an important area of need. Included in those areas of need is the residential housing market. Because of regulatory reform, many states have made in very difficult, if not nearly impossible, for private mortgage lenders to make loans on residential property – especially any owner-occupied property. This leaves many luxury residence owners or buyers without any kind of source for financing whether it be institutional or private.
MMG Capital is optimally structured to handle these types of requests because of the flexibility inherent in our lending program and our willingness to take additional steps to get loans closed. While other lenders have said farewell to most if not all residential lending, we continue to find ways to get loans funded regardless of the typical obstacles that stand in the way of such loans. MMG Capital accepts residential loan requests for both owner occupied and non-owner occupied property throughout the United States. Some of the most recent MMG Capital loan fundings have included loans on luxury residences in Florida, Deleware, North Carolina, Tennessee, California, and New York. If you are a mortgage broker that deals with high net worth clients, be sure to move MMG Capital to the top of your list of private mortgage lenders to call.
