Posted by John Corey on April 06, 2006 at 20:37:42:
Darryl,
From what you said the deal could be a good one. You really did not say enough to provide an unqualified answer. Better than saying twice the equity would be a discussion with some specific numbers.
Also understand that what is a good deal for one person is not even reason to get out of bed for someone else. One investor I spoke with expect $100K profit per transaction. He is in a high priced area. Another investor is very happy making $20K per transaction.
If you use HM then assume you need good cash flow to cover the monthly or a loan that has no payments until you pay it off. As the rates and points are higher you are trading some equity to get the deal done. If you can not do the deal any other way then HM is cheap compared to leaving a good deal on the table.
I have asked this question several times and received no answer. I will try one more time.
Will a hard money lender lend on a property that has a tax lien?
I am not sure if I am breaking some sort of TABOO subject, but I would really appreciate an answer from someone that has experience with hard money lenders.
Also, if I am able to get a loan can I refinance quickly after I receive the loan? dsgreen33@yahoo.com
I am a HML here in NC. Our attorneys have told us that if it is a purchase loan then not even a federal tax lien can be in front of our loan.
If, however, we were to do a loan where someone has already filed a deed (say from a subject-to deal) then it is now a refinance and the federal tax lien could jump in front of our loan.
I would be VERY interested if someone has any information contrary to this.
Thanks for the response on my question, it will help a lot. This property has lots of equity, even with the tax lien and the mortgage in preforclosure. If I can get a hard money loan to pay off the mortgage and the lien, there is still twice the equity in this house. I would then refi and pay off the HML, even with the high interest rates and points and still have lots of equity remaining. Is that a good deal?
Re: Is this a TABOO question? - Posted by Ed Garcia
Posted by Ed Garcia on April 06, 2006 at 10:40:19:
Darryl,
Hard Money Lenders make their loans based on equity position not credit criteria.
Since they make their loan based on equity, of course that?s exactly what they expect.
If there were tax liens or any lien prior to theirs that would make them a junior lien and that wouldn?t be their intention. They therefore would do a loan on a property that has a tax lien but the lien would have to be satisfied in the loan.
Re: Is this a TABOO question? - Posted by James Harris
Posted by James Harris on April 06, 2006 at 05:59:24:
DARRYL, I’m not an hard money lender, however, I would assume that one would lend on the property. The lien will have to be paid. Yet, if the lien plus purchase price and fixup costs are more than what the lender will lend on the property, then maybe not.
To answer the question…There is NO lender that would care about a tax lein as long as it’s paid at closing.
Jay…I would talk to another attorney. If you did a loan on a property and the tax lein (or any other lein) wasn’t paid, then you would not have a perfected title. You would be in a junior lein position. ALWAYS pay off tax leins unless you have a subordination agreement from the IRS.