As a hard money lender in Massachusetts, you need to be aware of any laws that specifically relate to hard money loans as well as those that relate to lenders in general. Your business can achieve a higher level of success and move smoother when you know the things that you can and cannot do under the laws in the state of Massachusetts. Before you make your first hard money loan it is essential to be well-educated in any laws that affect your business transactions.
Usury Laws in Massachusetts
Like other states Massachusetts has a ceiling on the amount of interest a lender can charge a borrower. This does not mean you have to charge the maximum interest allowable; you want to charge a rate that provides you with a reasonable return on your investment yet allows you to remain competitive. Hard money lenders in Massachusetts are not bound by all the laws other lenders must follow, but usury laws affect all lenders, hard money and traditional. In order to become a successful hard money lender you need to know all of the rules and regulations that govern the way you relate to borrowers and transact business.
A Proper Education is the Key to Knowledge
The easiest way to make sure you are familiar with how to handle your hard money transactions is to gain an in depth education in the rules and regulations that surround hard money loans in the state of Massachusetts. It’s important to you and the borrowers to make sure you follow the rules while also providing them with the highest level of loan servicing. Keep in mind you are providing a service that is similar to that of a traditional lender but at the same time you are providing a service for those who do not qualify for traditional financing for many different reasons including but not limited to the following:
Low credit score
Lack of sufficient credit history
Prior history of bankruptcy or foreclosure
Property does not meet the requirements for traditional financing (depressed property, lack of proper permits, etc)
Borrower needs the funds quickly
New business with minimal history of profitability or lacking proof of income
Laws Protect Borrower and Lender
One thing to remember about the laws that affect hard money lenders in Massachusetts is they are not designed just to protect the borrower but you as a lender as well. When there are laws that protect both borrower and lender it is easier for them to develop a good relationship and close the deal that is in the best interests of the borrower and allows the lender to make a healthy return on his investment.
Whether you are looking at the laws affecting hard money lenders in Massachusetts from a lender’s or borrower’s point of view, you still need an education in order to ensure you understand both ends of the spectrum. The laws are not intended to encourage borrowers to use hard money lenders but within the scope of specific regulations; they protect the lenders so they know how they can proceed with closing loans in an efficient manner.