Thanks to a new state law, investors have the right to get scores and the examination results for hard money lenders operating in Nevada.
Hard money lenders, sometimes called private lenders, solicit money from individual investors and use the money to make short-term loans to developers and others who provide real estate as collateral.
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Many retirees like these loans because they often earn double-digit interest rates, and lenders could foreclose on real estate if a borrower defaulted.
However, investors previously have been unable to get information exam results for hard money lenders from the Nevada Mortgage Lending Division.
Assemblyman Joe Hogan, D-Las Vegas, argued that investors need exam scores and examination findings in order to make informed decisions. He unsuccessfully tried to push a bill through the 2007 session, but was able to get the measure enacted this year with editorial support from the Las Vegas Review-Journal.
Jeff Guinn, owner of Aspen Financial, said his company has never scored below 2 but has mixed thoughts about disclosing the information to investors.
“I’m kind of on the fence,” Guinn said. “Releasing the scores is probably OK. Releasing the contents of the exams? I don’t know,” Guinn said.
Regulators keep bank exams confidential, he said. And he questions whether investors would understand the importance of specific violations found during the exams.
Violations can range from commingling money from investors with other accounts — which he called a “very serious violation” — to accidentally forgetting to have an investor initial a page of a disclosure statement.
Observers also note that a hard money lender can quickly correct deficiencies and violations after the mortgage division points to errors.
Both 1 and 2 ratings are good, with 1 ratings signifying near perfection, Guinn said. While proud of his 1 rating, Guinn said he would not advertise that score to get a competitive advantage over a competitor with a lower score.
The mortgage division has provided the Review-Journal with a list of some results although Commissioner Joseph Waltuch said the scores for OneCap Mortgage or CM Group LLC, formerly known as Consolidated Mortgage, aren’t final and cannot yet be disclosed.
Another source, however, said the division gave OneCap and CM Group, a 5 rating, the equivalent of an F grade.
Waltuch on Nov. 30 ordered OneCap Mortgage to stop activity that requires a license, because the firm didn’t obtain a required surety bond.
In Southern Nevada, Aspen Financial, Direct Investors Capital, Eagle Mortgage Co. Inc. and Vista Financial all were rated 1, the highest possible. Builders Capital rated 4, next to the bottom ranking.
These Southern Nevada hard money lenders were given 2s: Alliance Mortgage LLC, American Commonwealth Mortgage Co., Capella Commercial Mortgage, Capsource Inc., Clayton Mortgage & Investment, GFD Investments, Sierra Nevada Mortgage Co. and Vestin Group.
Rated 3 were All Western Mortgage, Goldwater Capital Nevada and Integrated Financial Associates Inc.
Individuals who want to see the scores and the examination findings of hard money lenders must submit requests in writing to the division.
Tags: All Western Mortgage, foreclose, Goldwater Capital Nevada, hard money, hard money lenders, Integrated Financial Associates Inc, investors, lenders, loan, money, mortgage, Nevada Mortgage Lending Division, real estate
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