Hard money lenders typically offer “asset-backed” loans that come with a higher interest rate, possible prepayment penalty, and shorter terms
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama in 2010 as a response to the financial crisis and recession. The act was intended to provide consumers with financial protections and other safeguards against predatory mortgage lenders, pay day lenders, banks, and credit card companies.
However, the primary reason Congress passed the law was to monitor and regulate the financial markets more closely. The Consumer Financial Protection Bureau (CFPB), a financial oversight, and investigative body that monitors mortgage lenders, was born out of Dodd-Frank.
Dodd-Frank has made many changes to past rules that regulate traditional mortgage lending. Although not specifically targeted by Dodd-Frank, the private lending industry, more commonly known as “hard-money loans,” is obligated under some of the act’s statutes. Dodd-Frank regulations will more tightly regulate hard-money transactions in a way that may affect how California real estate investors operate.
Hard Money Lending
Private money loans are designed to provide capital, primarily for real estate purchases or bridge financing, with fewer restrictions and faster turnaround times than that of traditional bank loans. (more…)