The Ohio Realtor newsletter arrived in the mail this week. One of
the main articles is titled "Seven reasons banks are denying home
loans". It is a sign of the times that this is news, but here are the
reasons banks are saying "no":
1. Poor credit
2. Insufficient liquidity (as in no cash for a downpayment)
3. Lack of income
4. Lying on the application
5. Debt (as in too much)
That applying these standards constitutes a problem tells
you how far off track our industry was in the mid-2000's.
The article then concludes:
"Once the traditional lending route has been exhausted, both
Realtors and potential buyers are often times at a loss of what
to do as a back-up plan. Private lending has been around for
many years, but most borrowers and brokers have no idea
that it's even an option.
" 'With the strict underwriting guidelines banks are governed
by these days, private lending is the wave of the future for
getting real estate loans funded,' explains Eric Wohl, president
of Noteflo, an online private lending marketplace launching
"NoteFlo's unique service allows borrowers to post loan
funding requests for free, which will be broadcast out to
thousands of private lenders that will bid for the opportunity
to fund their loan.
" 'Our goal is to make sure borrowers know that they
have plenty of other options if their loan application is
denied by a traditional bank.' says Wohl.
"For more information, visit www.noteflo.com."
All I can say is WOW. I wonder if the editors of the Ohio Realtor
have visited the noteflo web site.
Maybe I'm reading it wrong, but their web site sure makes it look
like their featured loans include 60% loan to value ratios and
interest rates higher than 11%. I know some private lenders.
They have always asked a premium of at least 6% over what
was available from a bank. So the indicated rates on NoteFlo's
site are not a surprise.
What is a surprise is that someone thinks this lending avenue
will be helping the person turned down by the bank.
Somehow I doubt that "private lenders" are much of a threat to
traditional banker or much of a help to the typical borrower.
I'm just curious what the editors of the Ohio Realtor were
thinking when they included this article in the September