Are you about to be blacklisted by mortgage lenders?
Some real estate investors have recently found themselves becoming ‘blacklisted’ by banks and lenders. Can they really do this, why does it happen and how can you avoid it?
New threads in real estate investing forums around the web show investors being blacklisted by banks who will not only refuse to loan to them but do deals in which they are involved in.
This isn’t actually a new phenomenon. It has at least been going on since the boom of the early 2000’s. Not only does this restrict a real estate investor’s financing options and their access to some deals or whom they can sell houses to but can get them on the radar of several agencies that they really don’t want the attention of.
Sometimes this is deserved but real estate investors don’t necessarily have to have done anything which is technically wrong to become blacklisted.
Sometimes it is due to being involved in deals where loans have gone bad in the past, flipping deals they shouldn’t have such as those with owner occupied loans or short sales, or due to lender reviews of appraisals after a deal is closed and finding a property was way overvalued by an appraiser. Know that banks and mortgage lenders have gotten far smarter about tracking these things and will check out deeds and past transactions involving different parties to a sale and look for patterns. So if they see you have bought and sold ten homes for a $100,000 profit each in the last couple of months and you are attempting to buy a short sale from them, they will jump to conclusions.
Fortunately, there are several ways to avoid getting blacklisted. Doing clean deals is a smart start. Being careful who you work with is another, as if you are doing regular business with someone on a watch list you will end up on one too. Also make sure to maintain your privacy at all times and utilize LLCs or other entities to buy and sell houses. The less transparent your assets are the less likely you will be the victim of malicious lawsuits or scams too.
Have you been blacklisted? Know someone who has been? Let us know…