Fairfield Financial Services, Inc. - Private Money Loans, Lending & Borrowing

The private money lending business: Likes and gripes (Part I of III)

S. Clay Sparkman

Some time ago, I published a 3-part post on our Private Money Investor blog regarding my personal likes and gripes as a purveyor of private money. This has been my sole job for the past 27-years, so I like to rant and rave about it every now and then. After all, who wouldn’t? The original posts went over well, so I thought I would bring them out, dust them off, and generally bring them up to date and post them here on our Private Money Broker blog. I hope you find these posts to be useful, and maybe even a little entertaining as well.

There is a bit of free association here, as I one idea leads to another and so on, allowing a combination of logic and emotion to carry the narrative, and thus these items are in no particular order. Here then are my most notable Likes and Gripes in my world of private money investing and lending:


The trust deed system (particularly as it works in Oregon, Washington, and California) is a thing of beauty!  It provides for order and procedure, eliminating subjectivity (except for in the event of a judicial foreclosure), nicely balancing the interests of the borrower/owner and those of all the lien holders involved with regard to their interests in a particular piece of real estate. Most of the professional investors I know enjoy and appreciate the West-coast trust deed system, and they have a lot more good than bad to say about it.


Associated with this is another wonderful thing they call title insurance. Title companies are the only businesses I know that provide insurance against the possibility of their own error. Knowing title companies as I do, I’m betting against them. I will take title insurance every time AND THUS I shall be able to sleep at night (as will my clients).


Which brings me to the escrow service role of the title company: This is a very tough job, high stress, with many people simultaneously placing multiple demands, and the need to consistently walk a tightrope avoiding costly problems and errors. I most certainly wouldn’t want to do it. And apparently most title people don’t either. Most title companies do a poor job of training and preparing their people and setting a high standard, and thus unfortunately, most escrow services offered by title companies stink. Fortunately, there are exceptions. Unfortunately, we often don’t have any control over where a particular closing is going to take place. I not only like a good Escrow Officer, he/she is my hero. On the other hand, a bad Escrow Officer tends to be very bad, and can easily kill a good transaction due to their ignorance, negligence, rotten attitude, or combination thereof.


Now I realize that this post is going primarily to loan brokers, but I still have to do this. I have often heard that 10% of realtors do 90% of the sales—and I suspect that the numbers are similar with regard to Loan Brokers. A good Loan Broker is worth her weight in gold—and there are some good ones out there (premium)—but there are oh so many sadly disappointing Loan Brokers as well. Many of these have simply gotten in way over their heads (particularly in the realm of private money brokering, where loans are not rolled out on an assembly line, but must be custom made by hand from the ground up). It takes a certain advanced degree of knowledge and skill to work with these loans effectively. Still, we need Loan Brokers, so we soldier on. I figure our loans at Fairfield are about 50%/50%, with half coming to us through Loan Brokers and the rest coming directly from the borrowers. The problems in my experience are not so much with honesty (though this certainly can be a problem from time to time), but with matters of basic business professionalism in general and knowledge of the private money lending business in particular. Of course, it is a big step for many Loan Brokers to move into the realm of private money and commercial lending, but my company works hard to provide assistance, education, and support; we spend an extraordinary amount of time working to educate Loan Brokers (and are pleased to do so). If you are already a top-notch professional in the realm of private money, please come and do business with us (immediately). If you are professional in your dealings and organized, but not very savvy with regard to the particulars of private money, come to us with an open mind and we will lead you through the process and do our best to give you a “Master Class” in private money. (Hey, a free education is not so easy to come by these days.)


I love my attorney. It took me years (and many discarded attorneys) to find a guy like him. Everything that you have ever heard that can be bad about attorneys: the opposite is true about my attorney. He is honest, pragmatic, honorable, and fair. He knows his limitations—and will be the first to tell you when he comes up against them–but at the same time has a vast breadth of knowledge regarding real estate matters and business in general. And he doesn’t start a clock every time he picks up the phone or answers an e-mail. Believe it or not, he actually seems to charge only for “real work:” research, written correspondence, document preparation and such. (And on top of all that, he’s the kind of guy you’d want to have a beer with.)  And speaking of lawyers, I have to say that I really enjoyed Happy Hour is for Amateurs, by Philadelphia Lawyer. If you are offended by explicit talk of sex, drugs, and binge drinking, you may want to give it a miss. But beyond the raucous tales, this book takes you right into the bowels of the enormous billing machine that is “the law firms of America.”  This book takes what we thought we already knew and knocks us right upside the head with it. It turns out that most of us didn’t even have a clue to how bad it is.

End of part I

— Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964. Fairfield is currently targeting loans in OR, WA, CO, MT, ID and NV. To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

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