A non-conforming loan is a loan that fails to meet bank criteria for funding.
Reasons include the loan amount is higher than the conforming loan limit (for mortgage loans), lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it. In many cases, non-conforming loans can be funded by hard money lenders, or private institutions/money. A large portion of real-estate loans are qualified as non-conforming because either the borrower's financial status or the property type does not meet bank guidelines. Non-conforming loans can be either A-paper or subprime loans.
The flexibility of private money can allow for a much wider range of deals to be funded, although more detailed and substantive collateral and documentation may be required by a lender.
Read more about Non-conforming Loan: Selecting A Non-Conforming Lender, Types of Non-Conforming Loans
Famous quotes containing the word loan:
“Slight was the thing I bought,
Small was the debt I thought,
Poor was the loan at best—
God! but the interest!”
—Paul Laurence Dunbar (1872–1906)