Will there be a Re-Emergence of Private banking as a result of the Tightening Lending Milieu?
Many years ago, when Jeff’s Grandfather (bless his soul) was a business owner in Muncie, IN during tough economic times, banks were not giving out many loans.
…So, rather than go out of business….
HE became a private banker and carried the note for some of his customers (i.e. set up the terms &; conditions for re-payment at a certain interest rate over a certain period of time).
Recently, we closed on another Land Contract in which the seller, who owned their home outright, became the BANK for the Buyers!
....By the way… it is estimated (2008 Data) that …“However, 40 percent of households do not have a mortgage on their home.”
If this is so….Private Banking may Re- emerge again, in times like these!
The process of doing a Land Contract Sale was very involved and much advance due diligence occurred (each side 
having attorney representation). The results were, in this case, a win-win situation for all parties involved.
With the banking industry loaning less and even HUD thinking about making FHA requirements tighter, Private Banking to facilitate Real Estate Sales by the Use of Land Contracts or Lease/Purchase Agreements is certainly a viable option for some sellers these days!
As we’ve said before “Cash is King “in Real estate sales these days, because there are less glitches to run into in the lending process without appraisals or underwriting conditions or lenders!
Can the re- emergence of Private banking be the next best thing to cash sales?
Time will tell.
It’s an option we are discussing with our sellers to investigate further, if they are in a position to carry their own papers like Jeff’s Grandpa did many moons ago.
Thanks for stopping by and reading our Blog about Life in NW Indiana, The Housing Market, Communities, Local Sports, Events, attractions & more.
Sincerely,
Jeff & Grace Safrin, Broker / Owners
F.C.Tucker 1st Team Real Estate
13 Lincolnway Suite # 203
Valparaiso, IN 46383
Office # 219-309-9930
serving Lake, Porter, La Porte, Jasper, Newton & Starke Counties in NW Indiana
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I think we will see a lot more creative financing in the next several years. Not only private banking, but wrap arounds. I don't think the banks will be enforcing the "due upon sale" clause on their notes, all they'll care about is that SOMEONE is making the monthly payment. With so many consumer's credit down in the dumps these days and for the forseeable future it will be an option many people will have to consider. Good post and best of luck to you.
Thanks Jerry - we agree that financing will be creative! Appreciate your insightful comments and for taking time to stop by and share them. Best of luck to you as well.
Sincerely,
Grace
Dynamite thought guys, I hope you're right. Although I love the lending business these days, I know that many more homes can be sold and more first time homebuyers helped if this type of lending were to come back. You're right though, it's a specialty and careful prospect ... need solid real estate professionals to help through the process.
It's not for every situation but can be a viable alternative for some. thanks for taking time to stop by and comment Steve.
Sincerely,
Grace
Hi Grace and Jeff,
It's wonderful that some homeowners are giving VTBs to buyers....this definitely is a Win-Win situation.
Jo
Grace and Jeff,
I am all for private banking; I have bought properties on land contracts and have held notes for some buyers and in the end it worked out just fine. I also made some money in the process.
Hello Jo - yes it is how banking probably started we believe - private note holders :)
Hi Tom - That is very savvy of you !
Thanks to you both for taking time to comment.
Sincerely,
Grace