A borrower may not qualify for an institutional mortgage loan for reasons such as low borrower credit scores or too much borrower debt.  Further, the property itself may not support the type of loan the borrower wants.  It may be a construction or land development loan, usually financial institutions do not want to be involved in this type of lending until the development and presales are completed. It may be that the land has not been re-zoned yet but is in the process, banks do not take that into consideration.   

In these cases Arres mortgage lenders may be the only available resource. Institutional lenders are concerned with the current appraised value of the property, the borrower’s credit, property credit and presales.  However, private mortgage lenders are primarily concerned only with the appraised value, provided it represents a fair market price.  Other considerations private lenders take into account are: does it make sense, what is the potential upside, how long will it take to sell if we have to foreclose?  Hence, if a property is producing or can produce sufficient income to pay the note, and the value of the property will provide sufficient equity, the borrower’s credit is not an issue for the private mortgage lender.