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The Paragon Method: 5 Walls of Defense

The Paragon Method: 5 Walls of Defense

Every loan that is approved by Hosper is behind a robust 5-wall barrier, protecting against potential risks at every stage of the lending process and ultimately keeping our investors’ capital as safe as possible.

Security is top priority, and we pride ourselves on our comprehensive approach to risk management.

Our hands on team of experts provide a list of 5 capital protection services on each mortgage loan:

Pre-Closing (Before the mortgage is funded and available for invesment)

  1. Underwriting
  • Property Valuation

Property valuation is the assessment of a property's market value by an approved appraiser or valuation expert. This estimate helps mortgage lenders gauge the property's worth and determine the appropriate loan amount, ensuring it provides sufficient security against the mortgage loan being underwritten.

  • Risk Assessment (Loan to Value)

Loan-to-value (LTV) is the ratio of a mortgage loan amount to the appraised value of the property. It measures lending risk, with a lower LTV indicating less risk for lenders. LTV helps determine the maximum loan amount and influences mortgage terms, interest rates, and eligibility.

  • Borrower Situation and Exit Plan Review

Reviewing the borrower's financial situation and exit plan reduces risk by assessing repayment ability and ensuring a clear strategy to repay or refinance the loan. A strong financial profile and feasible exit plan increase lender confidence, lowering default risk and enabling informed mortgage underwriting decisions.

  1. Legal Due Diligence
  • Fraud Prevention

Legal due diligence prevents mortgage loan fraud by verifying the accuracy of borrower information, property title, and ownership. It identifies discrepancies, fraudulent documentation, and undisclosed liabilities, ensuring compliance with legal requirements. This thorough review reduces the risk of fraudulent transactions and safeguards lender interests.

  • Title & Writ Search

A legal title and writ search are completed by confirming property ownership, revealing undisclosed liens, judgments, or writs, and verifying the seller's right to sell. This thorough review ensures clear title transfer, reducing fraudulent transactions and protecting both lender and borrower interests.

  • Title Insurance

Lender title insurance protects the lender against title defects, undisclosed liens, or ownership disputes. It ensures compensation for financial losses due to title issues, offering security for the lender and reducing risks of fraudulent claims impacting the loan's validity. 

  • Satisfied Loan Contract

When a mortgage borrower satisfies loan contracts by making timely payments and adhering to agreed terms, it ensures steady cash flow, reduces default risk, and minimizes potential legal disputes, thereby protecting the private lender's investment and maintaining a secure lending relationship.

Post-Closing (After the mortgage is funded and your capital is securely invested)

  1. Loan Servicing
  • Dedicated Borrower Care Team

A dedicated customer service team lowers mortgage borrower risk by offering tailored payment plans, promptly addressing financial concerns, and providing early support. This proactive engagement helps borrowers maintain payments, reducing default rates and enhancing the lender's overall loan performance.

  • Proven Collections Process

A clear NSF (non-sufficient funds) collections process lowers mortgage borrower risk by swiftly addressing insufficient fund payments, providing timely notices, and offering solutions to resolve missed payments. This proactive approach minimizes defaults, helps borrowers stay on track, and safeguards the lender's investment.

  • Flexible “Outside The Box” Solutions

Offering tailored solutions for mortgage borrowers, like flexible payment plans or refinancing options, can mitigate default risk by addressing individual financial challenges. Customized support helps borrowers manage payments effectively, reducing financial stress and improving the likelihood of loan repayment.

  1. Property Rehabilitation
  • Home Inspection Partners with Boots on the Ground

Close professional relationships with home inspection partners lower the risk of losing principal and maximize property value by ensuring comprehensive assessments that identify necessary repairs and improvements. Timely addressing these issues enhances property condition, increases market appeal, and allows sellers or owners to command higher prices, optimizing the return on investment for all parties involved.

  • Renovation Partners to Maximize Listing Prices

Professional renovations enhance property aesthetics, functionality, and market appeal, enabling owners to attract higher offers and achieve the best possible return on investment. Close relationships with home renovation partners maximize property value by ensuring quality improvements, timely project completion, and business-to-business pricing.

  1. Property Sale
  • Realtor Partners Specialized in Power of Sale Listings

A partnered network of real estate agents specializing in power of sale listings maximize the selling price by leveraging their market expertise, broad buyer networks, and effective marketing strategies. Their targeted approach attracts competitive offers, ensuring enforced properties sell quickly and for the highest possible price.

If you have any questions about capital security, please do not hesitate to reach out to our Investment Service Team. No question is too big or too small. We are happy to help!