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Indirect lenders
Traditionally, pension funds have participated in the marketplace in two areas, the first of these is a direct investment in commercial real estate development. The second are pension funds invested in the bond issue of the secondary market.
Insurance companies. Insurance companies control large amounts of capital in the form of insurance premiums which are held for long terms. The insurance companies would engage in participation loans with commercial developers as well to increase their rate of return. A participation loan is one in which the lender assumes a percentage of ownership in addition to the loan proceeds.
Mortgage correspondents. Mortgage brokers. Mortgage brokers feel in a role in the market of loans to consumers. The mortgage broker does not alone at his or her own funds. Mortgage broker is a knowledgeable real estate and loan professional who handles the ordination of a loan with the consumer. The broker the shops the loan with a variety of primary mortgage lenders who have programs that the borrower will qualify for. The broker then matches the borrower with a lender that will provide the best program at the best price to the consumer. The broker handles all the paperwork involved, held a lender and borrower set up escrow, orders appraisal, and takes care of the closing paperwork for the lender. By acting as a go-between, the mortgage broker often finds a much suitable loan program for a borrower, that a borrower shopping of his own for the best rate.
Mortgage bankers or mortgage companies. Mortgage bankers or mortgage companies also act in the role of intermediaries. Mortgage bankers and mortgage companies can both originate and loan funds. They are often long call in nature and receive lending funds from large national investors such as insurance companies and pension plans. The major national investors often are not aware of local market conditions and depend on the mortgage bankers to make stable loans for them in the local markets. While the mortgage bankers originate loans themselves the also worked with mortgage brokers. Mortgage brokers sell their loans into the secondary market as soon as they hand, seasoned. A seasoned loan is one that has been held for sufficient time to establish that the borrower is making their payments in a timely manner, often six to 12 months.
Private investors. Real estate investment trusts (REITs). A real estate investment unincorporated association of real estate investors managed by. This allows investor prefers released it as an investment to receive tax benefits similar to those granted to mutual funds and other regulated investment companies. Unlike ordinary corporations, whose earnings are subject to double taxation, the real estate investment trust earnings are taxed only ones, after they have been distributed to the investors.
Private individuals. The majority of these individuals are sellers who extend credit to their purchasers. This is the referred to, taking back or carrying back a part of the sale price often in the form of second mortgage. A second mortgage is often a source of funds on a lender will not loan the full amount of the purchase price of residence. |