FCI Lender Services, Anaheim Hills, Calif., the largest servicer of "private money" loans, said it is adding a new private money lender to its servicing base about every two days or so.
"Private money continues to move into the area left open by the institutional lenders who aren't lending," said FCI executive vice president Gordon Albrecht.
In 2007, before the subprime market crashed, the firm was adding a new servicing client about once a week.
At the end of September, the privately held FCI serviced $1.5 billion in mortgages. Its client base includes lenders that make private mortgages (usually real estate secured) to borrowers who cannot obtain credit elsewhere. (Private money lenders hold the paper themselves and do not sell loans into the secondary market.)
Albrecht told National Mortgage News that the biggest change he has seen lately is an influx of what he calls "soft money" borrowers. These are customers who have good FICO scores, but opt to use private money lenders and pay upwards of two points and a 10% note rate.
