If you use or have used "hard money" rehab lenders, you may have noticed that they have either fallen off the planet or have raised their criteria quite a bit.

It used to be either be that low to no credit was needed.  Now it is hard to find a rehab hard money lender that will not go below a 660 to 680 mid score (if they are still in business).

Why is this?  I thought if I had enough equity in the deal, they can fund it!  Why not?  Are they not thinking??

The truth is.....each state has their own foreclosure laws.  Depending on where the lender lends, they might have a long terrible time trying to foreclose on the property if you do not make your payments.  And as always, these lenders want to see an exit strategy.  A. Either sell the home as fast as possible (within 6 months for sure) or B. Refinance to a permanent loan.

The permanent lenders have all raised their requirements and demand to see a 680 mid score (in most cases) plus reserves and assets.  So.....the rehab hard money lenders must also follow the requirements of the permanent lender so that you qualify for the take out loan if needed.

I do expect the requirements to come down eventually. 

Ryan Hollingsworth

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