Hard money loans differ from traditional loans in that they are secured by real property based on the value of that property and are typically granted without the need for a credit check, appraisal, or evaluation of personal financials. This is often sought in commercial real estate ventures due to its short-term nature, allowing real estate investors to access capital quickly. Foreclosures on hard money loans are typically sought out because the lender recognizes that he will not get a return on his investment, due to the borrower’s delinquency.
For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed the complicated process of foreclosure for hard money lenders across the US. These lenders have different business models, but the same concerns when it comes to foreclosures. Because hard money lending periods are so short (typically anywhere from 6-24 months) lenders who find themselves needing to foreclose on real estate property are usually faced with their last resort. Lenders likely want to protect their assets and may want to complete the process as efficiently and quickly as possible. Lenders should keep in mind that strenuous regulations surround the foreclosure process in nonjudicial foreclosures.
Regulation Lenders Should Know
Besides the typical sequence of notices, which varies from state to state, that lenders must send to borrowers in the event of a foreclosure, there are other regulations and requirements lenders should be aware of when foreclosing commercial real estate.
Hard money loans are directly tied to the property which secures them. In most states, this means that lenders are required to go after the property first in the case of a foreclosure, that is, lenders may not seek to compensate any other type of assets from the borrower before they have foreclosed and recovered the property.
In certain states, lenders may be able to get a deficiency judgment after a foreclosure. (It is key to note that many states where Total Lender Solutions offers services, including California, Oregon, Washington, and Arizona, are among the few that do not allow deficiency judgments after a nonjudicial foreclosure.)
Many states also employ some version of a One-Action rule. In states that secure property with both mortgages and deeds of trusts, lenders may not pursue both judicial and nonjudicial foreclosures simultaneously, a practice known as dual-tracking. (Dual-tracking may be attempted by lenders for them to scout which track will provide them with the biggest return on their assets.)
In the event of a foreclosure, lenders must remember that they are only awarded the amount to pay off the loan debt and that any remaining equity made from the sale of the property is returned to the borrower.
What is the First Step to Enact a Foreclosure on a Hard Money Loan?
A third-party trustee focused on foreclosure is the best solution for lenders needing to enact a foreclosure on hard money loans. The first step is to enlist a team to work hand-in-hand with your team. Total Lender Solutions ensures that the foreclosure process goes from point A to B as efficiently as possible while protecting your assets and relieving your business of extra stress. Our thorough process knows that system inside and out and can give your business access to the resources it needs.
Keep Your Team Educated About Foreclosure Law
Total Lender Solutions works as a trusted extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today for help enacting your foreclosure.
