Why an Attorney for a Money Loan Lender is Necessary
When it comes to private loans or hard money loans, it’s essential to involve an attorney for the borrower’s protection. Private loans are very individualized and complicated, so a lawyer is needed to review all aspects of the contract.
It’s necessary to work with an attorney that has experience with hard money loans, not just a general counsel. Many real estate attornies have past experience dealing with private loans and can save the borrower money as they understand the typical issues that come up. The private money lender (PML) may be able to recommend an attorney that their clients use.
The lawyer should have a working knowledge of the state’s usury caps. Usury laws are regulations on the maximum interest rate that can be charged on a loan. Most often, loans will be set with an average interest rate, with a clause that if the borrower defaults, the interest rate can increase. A real estate attorney should review the usury caps to ensure they are fair and in your favor as much as possible.
Upfront fees should be a clear and open discussion between the private money lender and the borrower. A specialized attorney can review the contract to ensure the upfront fees are aligned with what was agreed on, and advise if the upfront fees are standard for the typical loan of the borrower’s size. This is yet another reason an experienced lawyer is essential. They will be able to identify if any of the fees associated with the loan seem significantly higher than ones they have come across in the past.
Repayment Term of the Loan
An attorney should review the repayment term of the loan, including the penalty fees. As a borrower, it’s essential to understand when penalty fees may occur, so they can be avoided as much as possible.
Default, Foreclosure, and Bankruptcy
Depending on the state the loan is being acquired, the private money lender may or may not have to adhere to banking laws. For example, private money lenders in the state of Texas must adhere to banking laws and regulations. However, PMLs in New Jersey, are not subject to following banking laws. Ultimately, this can make a significant difference in how a default or foreclosure is handled by the lender.
A specialized attorney can review the contract to understand and explain when the lender would be allowed to begin the foreclosure process. Ensure that the agreements outlined for default and foreclosure are fair, and seem within reasonable limits, so this situation is avoided at all costs.
Private Money Loans in Texas: Wildcat Lending
Wildcat Lending is the number one source for private money lending in Texas. Wildcat Lending produces fast, reasonable, and secure real estate loans that allow our borrowers to close every time. The team at Wildcat Lending has over 45 years of combined experience in private money lending. We are happy to work with your attorney to find a loan agreement that best suits your needs. Call today for more information at 214-743-4145.