Lendinghome Reviews & Ratings
Type:
Real Estate Debt
Focus:
Debt

Overall:

Platform Provided Due Diligence:

Platform Fees:

Quality of Deals:

Website - LendingHome.com

Fees - 10% of the coupon rate

Phone - 310.907.7129

LendingHome funds mortgages for real estate professionals and makes them available to you as fractional notes, meaning you can buy a portion of the mortgage. You can either choose individual notes based on risk and return levels or let AutoInvest do the work for you by selecting a conservative, aggressive, or all-notes strategy. Put as little as $5,000 into each investment. 

Borrowers will repay the loans you're invested in on a monthly basis. You own a portion each loan you're invested in and will receive a share of each payment. Log into your investor dashboard at any point to see how your investments are performing and summarized statistics for your portfolio.

We perform a comprehensive assessment of many parts of the loan, including the borrower’s credit, the asset valuation, and additional considerations specific to the opportunity being assessed. This diligence helps us offer you high quality investments so you won’t have to worry about evaluating each detail of the loan. If you do want to learn more about the mortgages in your portfolio, you can see information about the borrower, property, and loan terms through the investor portal.

LendingHome At A Glance

LendingHome is a different type of crowdfunding real estate business site. In fact, Matt Humphrey, the firm’s CEO and co-founder, doesn’t even use the term internally because that’s not what LendingHome does. That’s because LendingHome’s mortgage loans are already funded before being opened up to investors; Humphrey calls this a “closed loop, end-to-end residential lending space marketplace” where the entire lending process has been redesigned in order to apply new technologies to make it a better experience for investors and borrowers alike.

The main draw from LendingHome is its bridge loan program. If you’re looking to invest in a residential rehab to fix up and flip, reviews reveal that this business is a great place to start. The lender also has a test program on offer that, in time, may lead to potentially offering consumer home loans as an online alternative to traditional mortgages from banks; for now, however, the business is focusing its experience on bridge lending. 

For your information, bridge loans are short-term mortgages that can be leveraged to quickly purchase a property. It’s usually a stopgap measure until either more permanent financing is taken care of, or if the home is rehabbed and/or sold. LendingHome’s bridge lending was specifically designed to finance flips or rehabs undertaken by property investors. 

Bridge loans offer advantages in terms of how quickly you can receive funding. Borrowers usually need only a handful of questions before receiving a customized rate. Applications are expedited, but underwriting and credit checking activities are still robust - upon review, it still takes 10 to 14 days to close on a bridge loan. This is much easier for a lender than going to a traditional bank, as the experience there is much slower and more risk-averse. If a prospective borrower’s credit score isn’t perfect, their house flipping business isn’t going to get a good deal from a traditional lender.

Either way, LendingHome has been a true success story, funding more than $1.5 billion in mortgages as of August 2017.

How Investing Works

The investing process for LendingHome review is relatively straightforward. Accredited investors interested in using the platform need to sign up through the business website; once this is done, investment opportunities become immediately visible. Once selecting an investment after browsing through notes, the website will guide an investor through LendingHome’s verification process. This is designed to ensure you’re an eligible investor - most specifically, that you meet the criteria for being an accredited investor. LendingHome does this through a third party online process known as Accredify, a business accreditation information specialist. Upon review, this process usually takes around 48 hours. 

 Once an investor has been verified, investors can link their bank account to the LendingHome business system. LendingHome verifies your account by making a pair of micro-deposits, a process that likewise can take up to two days. Once your account has been verified, you can deposit funds directly into your LendingHome account and begin investing by buying into a Platform Note and choosing the amount of money you want to invest. Cash flow earnings begin the same day, as you receive a principal interest in the Platform Note immediately.

In essence, there’s only four steps to getting set up as a LendingHome member:

  • Create your account account at the LendingHome website

  • Verify your status as an accredited investor

  • Link your bank account

  • Fund your LendingHome account, browse notes, and choose one to invest in

For borrowers, loan terms start at a rate of 7%. Property types are limited to up to 4 residential unit properties. Loans are available up to $1,000,000 with a minimum of $75,000 and a term of 12 months. Lending fees are 2.5% with a minimum of $2,500 and support up loans that are as high as 80% loan-to-value. Processing costs are low, typically only ? the industry average in review, with borrowers reaping the rewards of those savings. 

Risk Grades and Fees

Not all LendingHome mortgage loans is created equal. Each bridge loan is given a risk grade. Depending on the grade of the loan, it’s assigned a “coupon rate”. Generally, there are five risk grades offered per coupon rate, organized in letter-number combinations. Risk grades A1 through A5, for example, carry coupon rates ranging from 6.05% through 6.95 percent. Grades B1 through B5, meanwhile, carry rates of 7.08% through 7.98%, and so on until the lowest risk grades. The bottom grades are I1 through I4 and range from 15.75% through 17.75%.

Fees and Service Charges

LendingHome charges a financial servicing fee that is equivalent to 1/10 the coupon rate of the loan. In other words, the net coupon is 9/10 of the gross. These fee structures are universal, as institutional partners and accredited individual investors pay the same regardless. 

More information about fee schedules also include incentive fees collected from monthly interest payments to business investors. These fees are performance based and range from 1.15% to 2.6%. This fee offsets any possible future losses; as such, these are not collected if an investment is missing its target. 

Platform Notes themselves are unsecured, limited-recourse obligations of LendingHome Funding Corporation. Each note will correspond with an underlying mortgage loan that originated on its platform.What this means is that Platform Note payments are made as payments collected by the company. If a loan is defaulted or a borrower is delinquent in repayment, LendingHome Funding Corporation takes care of all the servicing business; you will still participate in the payoff.

Risk Mitigation

As a lender, LendingHome takes many risk mitigation steps to protect Platform Note investors. This includes recording a first lien position against the property for the entirety of the loan amount. This means that, if the loan goes into default, this lien gets satisfied first before any other claims on the property. Borrowers stand to lose quite a large amount of equity before your loan is impacted negatively though, as LendingHome assigns a 70% weighted average loan-to-value.

LendingHome also takes out Lender’s Title Insurance on every loan to provide additional protection, especially to safeguard you against third-party liens or title defects. Additionally, LendingHome Funding Corporation is the first loss payee named on the loan’s Hazard Insurance policy. This protects your loan in the event of unintentional destruction or damage by not just hail, wind, fire, or smoke, but also events like vandalism or theft. To make special business servicing even eiser, there’s no subordinate liens allowed to be recorded against the property, either. 

LendingHome is proud of its financial lending program, as it offers loans for underserved borrowers. When a rehabber can’t get a traditional loan quickly enough to buy and flip a property, LendingHome is there, willing to take a chance. This means that, in many cases, default risk may be either significantly higher or even lower; it’s simply impossible to know without enough history. Yet despite this, LendingHome says that it has a delinquent rate of only 7.2% over the more than 3,500 loans it’s issued as of June 30, 2016. It’s also only had the experience of four foreclosures. Upon review, the historical losses of this business stand at less than 0.01%.

LendingHome currently operates in 23 states in the US. These states include Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Michigan, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, and West Virginia.

LendingHome Pros & Cons

Pros

  • Prefunded Loans: No waiting for loans to be crowdfunded with LendingHome. All available loans have already been closed with the company’s own funds, giving you same-day interest upon your own investment. 

  • Immediate Cash Flow: Investors receive Platform Note principal interest instantly, with cash flows starting immediately from that day. 

  • Diverse Investments: With Platform Notes starting at $5,000, LendingHome’s Bridge Loan Program enables investors to diversify across any number of underlying mortgage business loans.

  • Customer Service: Phone and email contacts from Investor Relations Specialists are frequent and immediate once investors sign up on the LendingHome website and share their customer information.

Cons

  • Only Accredited Investors: LendingHome is only open to what the SEC refers to as “accredited” investors, which have very high net worth and minimum annual income thresholds. Upon review, this eliminates LendingHome as an investment platform to small-scale investors entirely. 

  • High Investment Minimums: With a minimum of $50,000 in capital required to participate in LendingHome’s retail investor platform, this is another bar to entry. However, you can diversify your holdings in up to 10 different Notes, as each note has a $5,000 minimum investment. 

  • Gains Taxable as Interest Income: LendingHome loan investments create interest income. This is taxed at marginal rates, which is higher than the 20% maximum net capital gain tax rate.

  • Unsecured Platform Notes: Mortgages are secured on LendingHome, but Platform Notes are not. This is due to an exemption in the Securities Act of 1933 in regards to registration requirements, and this exemption has stood for years without being challenged.

Is LendingHome For You?

Traditional mortgage processes are the farthest things from fast and efficient. As a financial business lender, LendingHome seeks to upend this process, speeding up the ability for borrowers to secure funds through technology. At the same time, the platform provides opportunities for accredited investors to make easy investments in real estate notes. It’s a unique online business platform that works to connect investors who want to get into the real estate market with real estate property borrowers that need funds quickly to rehab and flip residential properties. 

It’s a good deal for lenders with deep pockets looking to diversify their holdings. Real estate investment is an excellent opportunity for building retirement income, and with LendingHome offering ironclad insurance on these secured mortgages themselves, risk is about as mitigated as you can get with investing in house flipping. Remember, though, that these individual Platform Notes are not secured - and that the house flipping industry carries its own level of risk. If you’re comfortable with such risk levels, then we can recommend LendingHome’s services to you, especially with the high levels of lender customer support and experience the company provides. Information on each of your investments is always available when desired.

Upon review, however, if you’re looking for small-scale investment experience, however, LendingHome just simply isn’t for you. As a mortgage lender that demands its investment partners be accredited, this company excludes a huge customer base from accessing its services. Sadly, many lenders choose to go this route, thus reserving the market. There are financial companies out there that offer to service non-accredited individuals and ones that provide their service to those without a perfect credit score. LendingHome may be a solid investment, but it’s not the kind of company that a small-time investor will ever be able to access.

Due Diligence & Discussions

Share your experience. Rate and comment!

James Mc Ree

Mar 21, 2018

I exited my last LH deal.  Their yields have plunged and they've raised their prices.  The same issues I commented on previously regarding no opportunity to do meaningful due diligence and non-existent communications persist.  Not recommended until they change.

Rates are usually in the 6-8% range now.

Suhail Mohammed

Jul 07, 2017

I have done a whole lot of deals on lending home, about 40+ and around 10 have paid off early. It has been a very good experience so far except for the recent fee spike. I like their volume and loan variety. So far, no issues.

Jack Reidy

May 03, 2017

Twelve deals on the site with 6 closed. Three of these deals are in foreclosure so I'm awaiting how these will be resolved before I invest further. I agree with previous reviewers that there is plenty of inventory on LH.

Most of these investments are bridge loans that last less than 12 months. This may or may not hurt some folks from a tax perspective.

 

Bill Scott

Feb 04, 2017

I have been on LendingHome since about the time they started taking accredited investors (early 2015). I have had nothing but a stellar experience. I have about $55k in the platform and about 11 current loans. I have auto invest and was mostly focused on whole platform (some early loans I hand picked). I have been averaging 10.47%. I only had one loan go late and that loan got back on track within about 40 days or so. 

I decided to invest on their platform (it was my first CFRE) based on a recommendation from someone who works for me. We had acquired his startup a couple years back and one of his VCs is also a VC for LH. I did a bit of checking on that and after understanding their approach around using data science to provide a risk profile, I was actually good with it. Why? Because I am a VP at one of the largest payment companies in the world and I am intimitately familar with what is possible from good Risk Science. I saw also they brought in some top talent in this regard and that led me to have more confidence. I also sent them a bunch of user experience feedback (part of my background is leading experience engineering at Netflix) and that led to me spending time discussing the platform with their head of product.

All that to say it does exactly what it advertised. My returns are what I thought they would be. And I don't expect there to be zero late or zero defaults. The key is there is a recourse for them to recover. I am comfortable with that risk to get higher returns.

I like having a dozen or so of these loans and my risk spread about.

Negatives.

Cash drag. Increments of $5k means if you aren't careful you can have money sitting in their balance doing nothing. $50k spinning off $400 or $500/mo will take 10-12 months or more to get reinvested. I can't find a way to auto deposit (like you can with PatchOfLand).

I would probably change my rating on Quality of Deals. In one sense I don't even care that much as I don't find myself looking at the deals. They are "commodity" for me as I trust the platform and approach and the individual deals are not what I look at, but instead auto-invest is basically a dynamic fund of bridge loans

Only residential could be a negative. But I use PatchOfLand for other diversification (as well as YieldStreet -- another review later) for my Debt investments.

Tax implication. But this is the same for all Debt CFRE opportunities. I balance this with equity investments.

From my research here is a recap:

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- Requires minimum of $50K on the platform

- Provide bridge loans (hard money) for rehabbers/flippers

- Individual loan investments can be as low as $5K each

- They originate their own loans and do all the risk underwriting (contrast with PeerStreet that brokers with hard money lenders nation wide which has both positives and negatives)

- Interest seems aligned with investors.

- They assign a grade for lenders and allow you to select individual loans to invest in or you can choose a target return and turn on autoinvest

- LH makes the money on the spread of what they charge the borrower and what they pay the investor (usually 1-2%)

- Does not automatically move your money to your bank account (and investment happens in $5k increments which means you can have cash drag)

- Bigger goal of the platform is to disrupt the mtg industry. They also partner with real estate brokers and mortgage brokers

- Deal flow is really not prominent. Even the way they display the opportunities you just don’t find the information that helpful (these are fixer uppers) although you can look for ARV (after repair value) and the LTV (loan to value) to determine suitability.

- Have originated over $1B in loans

- You aren’t directly secured, but LH holds first lien and ensures they are careful with LTV and ARV. 

- Only one default and it was recovered. Loss rates are extremely low. This follows my experience (about 9 months).

Bill Scott

Feb 04, 2017

Also, I concur with @james. Both of his points are spot on

George Dai

Jan 31, 2017

First deal in default (not paid for three months) and most likely going to foreclosure. Stopped investing after three deals.

James Mc Ree

Jan 30, 2017

I've done about 15 deals with LendingHome.  Overall, I like them.  They provide a good inventory of loans with decent returns.  They are easy to work with and payments arrive consistently (when borrower pays).

My 2 biggest complaints with this platform, apart from some web site interface issues, are:

It is nearly impossible to do any meaningful DD as they release no identifying information on the properties indebted by the notes nor the borrowers.  Investors must hope and trust LH to get it right or the investor pays.

Proactive communications are non-existent.  Their investor relations folks are good when contacted, but they have no outreach whatsoever.  A borrower didn't pay?  You will find out when your expected aggregate payment arrives short in your bank and you logon and find the non-payer yourself.  There are no meaningful progress updates nor explanations of issues on the site.

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Lendinghome Reviews & Ratings Lendinghome Reviews & Ratings
Rated 2.8/5 based on 11 customer reviews

Website - LendingHome.com

Fees - 10% of the coupon rate

Phone - 310.907.7129

LendingHome funds mortgages for real estate professionals and makes them available to you as fractional notes, meaning you can buy a portion of the mortgage. You can either choose individual notes based on risk and return levels or let AutoInvest do the work for you by selecting a conservative, aggressive, or all-notes strategy. Put as little as $5,000 into each investment. 

Borrowers will repay the loans you're invested in on a monthly basis. You own a portion each loan you're invested in and will receive a share of each payment. Log into your investor dashboard at any point to see how your investments are performing and summarized statistics for your portfolio.

We perform a comprehensive assessment of many parts of the loan, including the borrower’s credit, the asset valuation, and additional considerations specific to the opportunity being assessed. This diligence helps us offer you high quality investments so you won’t have to worry about evaluating each detail of the loan. If you do want to learn more about the mortgages in your portfolio, you can see information about the borrower, property, and loan terms through the investor portal.

LendingHome At A Glance

LendingHome is a different type of crowdfunding real estate business site. In fact, Matt Humphrey, the firm’s CEO and co-founder, doesn’t even use the term internally because that’s not what LendingHome does. That’s because LendingHome’s mortgage loans are already funded before being opened up to investors; Humphrey calls this a “closed loop, end-to-end residential lending space marketplace” where the entire lending process has been redesigned in order to apply new technologies to make it a better experience for investors and borrowers alike.

The main draw from LendingHome is its bridge loan program. If you’re looking to invest in a residential rehab to fix up and flip, reviews reveal that this business is a great place to start. The lender also has a test program on offer that, in time, may lead to potentially offering consumer home loans as an online alternative to traditional mortgages from banks; for now, however, the business is focusing its experience on bridge lending. 

For your information, bridge loans are short-term mortgages that can be leveraged to quickly purchase a property. It’s usually a stopgap measure until either more permanent financing is taken care of, or if the home is rehabbed and/or sold. LendingHome’s bridge lending was specifically designed to finance flips or rehabs undertaken by property investors. 

Bridge loans offer advantages in terms of how quickly you can receive funding. Borrowers usually need only a handful of questions before receiving a customized rate. Applications are expedited, but underwriting and credit checking activities are still robust - upon review, it still takes 10 to 14 days to close on a bridge loan. This is much easier for a lender than going to a traditional bank, as the experience there is much slower and more risk-averse. If a prospective borrower’s credit score isn’t perfect, their house flipping business isn’t going to get a good deal from a traditional lender.

Either way, LendingHome has been a true success story, funding more than $1.5 billion in mortgages as of August 2017.

How Investing Works

The investing process for LendingHome review is relatively straightforward. Accredited investors interested in using the platform need to sign up through the business website; once this is done, investment opportunities become immediately visible. Once selecting an investment after browsing through notes, the website will guide an investor through LendingHome’s verification process. This is designed to ensure you’re an eligible investor - most specifically, that you meet the criteria for being an accredited investor. LendingHome does this through a third party online process known as Accredify, a business accreditation information specialist. Upon review, this process usually takes around 48 hours. 

 Once an investor has been verified, investors can link their bank account to the LendingHome business system. LendingHome verifies your account by making a pair of micro-deposits, a process that likewise can take up to two days. Once your account has been verified, you can deposit funds directly into your LendingHome account and begin investing by buying into a Platform Note and choosing the amount of money you want to invest. Cash flow earnings begin the same day, as you receive a principal interest in the Platform Note immediately.

In essence, there’s only four steps to getting set up as a LendingHome member:

For borrowers, loan terms start at a rate of 7%. Property types are limited to up to 4 residential unit properties. Loans are available up to $1,000,000 with a minimum of $75,000 and a term of 12 months. Lending fees are 2.5% with a minimum of $2,500 and support up loans that are as high as 80% loan-to-value. Processing costs are low, typically only ? the industry average in review, with borrowers reaping the rewards of those savings. 

Risk Grades and Fees

Not all LendingHome mortgage loans is created equal. Each bridge loan is given a risk grade. Depending on the grade of the loan, it’s assigned a “coupon rate”. Generally, there are five risk grades offered per coupon rate, organized in letter-number combinations. Risk grades A1 through A5, for example, carry coupon rates ranging from 6.05% through 6.95 percent. Grades B1 through B5, meanwhile, carry rates of 7.08% through 7.98%, and so on until the lowest risk grades. The bottom grades are I1 through I4 and range from 15.75% through 17.75%.

Fees and Service Charges

LendingHome charges a financial servicing fee that is equivalent to 1/10 the coupon rate of the loan. In other words, the net coupon is 9/10 of the gross. These fee structures are universal, as institutional partners and accredited individual investors pay the same regardless. 

More information about fee schedules also include incentive fees collected from monthly interest payments to business investors. These fees are performance based and range from 1.15% to 2.6%. This fee offsets any possible future losses; as such, these are not collected if an investment is missing its target. 

Platform Notes themselves are unsecured, limited-recourse obligations of LendingHome Funding Corporation. Each note will correspond with an underlying mortgage loan that originated on its platform.What this means is that Platform Note payments are made as payments collected by the company. If a loan is defaulted or a borrower is delinquent in repayment, LendingHome Funding Corporation takes care of all the servicing business; you will still participate in the payoff.

Risk Mitigation

As a lender, LendingHome takes many risk mitigation steps to protect Platform Note investors. This includes recording a first lien position against the property for the entirety of the loan amount. This means that, if the loan goes into default, this lien gets satisfied first before any other claims on the property. Borrowers stand to lose quite a large amount of equity before your loan is impacted negatively though, as LendingHome assigns a 70% weighted average loan-to-value.

LendingHome also takes out Lender’s Title Insurance on every loan to provide additional protection, especially to safeguard you against third-party liens or title defects. Additionally, LendingHome Funding Corporation is the first loss payee named on the loan’s Hazard Insurance policy. This protects your loan in the event of unintentional destruction or damage by not just hail, wind, fire, or smoke, but also events like vandalism or theft. To make special business servicing even eiser, there’s no subordinate liens allowed to be recorded against the property, either. 

LendingHome is proud of its financial lending program, as it offers loans for underserved borrowers. When a rehabber can’t get a traditional loan quickly enough to buy and flip a property, LendingHome is there, willing to take a chance. This means that, in many cases, default risk may be either significantly higher or even lower; it’s simply impossible to know without enough history. Yet despite this, LendingHome says that it has a delinquent rate of only 7.2% over the more than 3,500 loans it’s issued as of June 30, 2016. It’s also only had the experience of four foreclosures. Upon review, the historical losses of this business stand at less than 0.01%.

LendingHome currently operates in 23 states in the US. These states include Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Michigan, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, and West Virginia.

LendingHome Pros & Cons

Pros

Cons

Is LendingHome For You?

Traditional mortgage processes are the farthest things from fast and efficient. As a financial business lender, LendingHome seeks to upend this process, speeding up the ability for borrowers to secure funds through technology. At the same time, the platform provides opportunities for accredited investors to make easy investments in real estate notes. It’s a unique online business platform that works to connect investors who want to get into the real estate market with real estate property borrowers that need funds quickly to rehab and flip residential properties. 

It’s a good deal for lenders with deep pockets looking to diversify their holdings. Real estate investment is an excellent opportunity for building retirement income, and with LendingHome offering ironclad insurance on these secured mortgages themselves, risk is about as mitigated as you can get with investing in house flipping. Remember, though, that these individual Platform Notes are not secured - and that the house flipping industry carries its own level of risk. If you’re comfortable with such risk levels, then we can recommend LendingHome’s services to you, especially with the high levels of lender customer support and experience the company provides. Information on each of your investments is always available when desired.

Upon review, however, if you’re looking for small-scale investment experience, however, LendingHome just simply isn’t for you. As a mortgage lender that demands its investment partners be accredited, this company excludes a huge customer base from accessing its services. Sadly, many lenders choose to go this route, thus reserving the market. There are financial companies out there that offer to service non-accredited individuals and ones that provide their service to those without a perfect credit score. LendingHome may be a solid investment, but it’s not the kind of company that a small-time investor will ever be able to access.