I blogged last week about our best bridge loans, including our latest and greatest offer: JVM’s EasyPath.
We knew EasyPath would be a popular offering, but we were caught off guard by the response we got from that blog.
Several agents, however, asked us what the catch is…
So, here’s the catch: The investor hopes they’ll collect $2,500 for doing pretty much nothing.
That’s not just the catch; that’s their entire business plan. They hope they will collect hundreds of $2,500 fees every month without ever actually buying or selling any homes.
EasyPath Mortgage Program
As a quick reminder, our EasyPath program works like this: the investor does not lend any money, but it does agree to buy a borrower’s home (departing residence) – so that the borrower does not have to include the home’s payments in her debt ratios when qualifying to buy a new home.
This often allows borrowers to buy a new home before they sell their existing home/departing residence – which is precisely what makes this and other “bridge” offers so enticing.
After our EasyPath investor agrees to buy the borrower’s home, they give the borrower a full 120 days to sell her home – and our investor hopes like hell that the borrower can sell the home herself within that 120-day period.
And that is what actually happens with almost every transaction. So, yes, the investor is just hoping that it gets $2,500 for effectively doing nothing.
Note: our investor would take umbrage with me saying the above, as they would point out that they are taking on the risk of actually having to buy the home – should it not sell – and that $2,500 is a very small fee for setting up the program (with all of its legalities, liabilities, regulations, and paperwork) and taking on that risk.
If a home does not sell within 120 days, and the investor does end up taking it over and selling it, it will still give 90% of the net proceeds to the borrower who entered into the EasyPath agreement.
So, that is the worst-case scenario, and that could be considered an “additional catch,” but, once again, our EasyPath investor would much rather see its clients just sell the homes themselves.
