Do Mortgage Defaults Effect MCA Qualification?

Almost daily we receive submissions for Merchant Cash Advances from business owners that have perfect credit other than a mortgage default/severe delinquency. Many times these owners are perfect with every other payment (car notes/leases, credit card cards, utilities, etc.) and still suffer from sub-600 FICO scores. This obviously makes them ineligible for any type of bank financing.

For a multitude of reasons these merchants are walking away from their homes. During our merchant interview we hear horror stories about how they have tried to negotiate with the bank to do a loan modification or some other workout. We'll this video shows you the real story on why the banks make more money when the home owner defaults. It also reinforces what we all know, that bailouts only help Wall Street who doesn't need them and never reaches Main Street!



Here at American Finance Solutions, we welcome these clients who have good credit except for the mortgage and have a steady business. We know that they are highly unlikely to walk away from the business that they have worked so hard to build. Often we ask for back up paperwork to show that they applied for the loan mod or negotiated a short sale. If they already walked away from the property and the foreclosure is complete then usually documentation is not required. These are good credit worthy clients caught in an unfortunate situation.

If the business owner is a low-500 FICO and struggling across all credit lines, then we have to take a good hard look at the complete picture on both the personal and business side to make a credit decision.

I recently polled our competitors and about half take the same position as AFS, while the other half adhere to strict guidelines. Some require no more than 60 days down on a mortgage while others are 120 days late.

So, do mortgage defaults effect a business owners ability to qualify for an MCA? The answer is, it depends on the situation and who you apply to.