Types of Real Estate Loans

Portfolio Loans

Portfolio loans are loans that are designed by the investor to keep in their own portfolio.  They are not written to conforming guidelines, but rather guidelines set by the actual investor. The investor may be a bank, Savings and Loan, insurance company, pension fund, or individual.  While these loan can be sold on the secondary market, there is usually not a preset market for them ,and the sales are usually individually negotiated.  It is common for these loans to stay with the original investor for their entire term, even if arranged by a broker/ banker.

Typically they will write in some special features that will make the loan attractive to a set of borrowers that the investor wants to attract. The investor decides which risks they are willing to take, and makes their lending decisions based upon their own guidelines rather than those of the larger market.  It is these types of lenders that may be able to see around a flaw in the system and make exceptions to generally accepted policy when the situation warrants it.

 In today's market, the major players in these loans usually stick to established guidelines.  You are not likely to see a large departure from what Fannie and Freddie are doing.  When the economy improves, and/ or it is deemed that the risk has passed you may see a little more creativity.

When (or if...) you see EZ doc loans come back into the picture you will know that the perception is that the economy is strong and that there is a strong feeling that such loans will be paid back.   Ironically, if we had sensible EZ doc loans now in place it is likely that the real estate crisis, and the poor economy, would improve dramatically.  There are so many purchasers who could make payments that are being shut out of the market by the stringent requirements that there absence is severely restricting the market. Notice the word "Sensible"  People with verifiable assets, excellent established  credit histories are still a good risk.  It was the Zero-down EZ Doc marginal credit lending that got us into trouble. Going back to that will never be a good idea.

The original EZ doc loan was intended for  a self employed borrower with great credit, a sizeable down payment, and money in the bank. They were then and are now a good risk. The lending industry is shooting itself in the foot by denying these borrowers loans.


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