What's the deal with private lenders, anyway?

  • Today the primary sources of mortgage credit are government agencies, all with relatively rigid standards.
  • There are private sources, but they are rare.
  • Today, since investors desperate to earn something on assets, all sorts of private financing should appear. But it has not: The reach of regulation has crushed even private parties.

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Lenders are often asked, “Aren’t there any private lenders?” (Realtors and borrowers often ask us shortly after we have told the applicant, “Fannie says no.”) Today the primary sources of mortgage credit are government agencies, all with relatively rigid standards. Jumbo lending is similar, a narrow and shallow side-pocket. “Yes, but I have a friend who heard about a client who got a private loan. Do you have any of those?”