In lieu of the current mortgage crisis, private mortgage firms are quickly becoming a growing segment of the lending industry. Part of the reason for this is that they are not bound by many of the rules and regulations that traditional lending entities must abide. Private mortgage companies have a tendency to be willing to provide a loan to an individual or business that might otherwise have been turned down by a traditional lender.
A private mortgage is a loan financed by an entity independent of banks or common financial lending institutions. Essentially, they are private loans offered by individuals or businesses with the express purpose of purchasing property. Such lenders are often more concerned with the collateral offered to secure the loan as well as the current and potential equity of the property. In other words, while banks would prefer to avoid the laborious process of a foreclosure in the event of a default a private mortgage company is more willing to take the risk and enter into foreclosure. Part of the reason for this is that a private mortgage company might have an infrastructure in place regarding the sale of the property or perhaps may even hold the property to gain equity or even rent it out.