Financing Hoarder Homes

We’ve all seen the reality TV shows about hoarder homes and the difficulties that these situations may present.

But in front of the TV cameras are real people, and these real people may come to you for financing help.  In fact, you may not even realize that there is a hoarding situation until you see the appraisal.  So, what do you do then?

Many times, hoarding properties won’t be approved by lenders.  This is due to the fact that in the case of a foreclosure sale, the property will need to be cleaned up and the borrower relocated.

However, there are occasions where the facts of the borrower’s situation may leave an opening for financing.  Some examples where lenders are more willing to consider an exception would be:

• If the loan to value is extremely low and the land value alone covers the security requirement.
• If the subject property is not a principal residence
• If the property is otherwise well maintained and the nature of the contents of the house is more items of interest than garbage.
• If there is a financially strong guarantor or additional property that can be added to the security.

On the other hand, you may also have a borrower who is looking to purchase a hoarder property.  In these situations, you are much more likely to find a lender to work with.  Provided that certain conditions are able to be met, such as:

• The LTV is low enough
• The borrower has the expertise to remedy the property
• Possibly has additional collateral to add to the mortgage

Files with hoarder homes are not easy. And so, it’s important to know what to look for and what to be cautious of when working with them in order to find the files that may be financeable.  And always remember to talk to your lender and ask questions if you need help or clarification.