Washington DC Hard Money Loan Guide

Homeownership in Washington D.C. is statistically lower than the average rate across the country. Coming in right at 43%, this is well below national average and trends for the past ten years. However, home buyers in D.C. still want a chance to own their own piece of the American dream. Hard money loans, offered by small group investors and individuals can provide an alternative to traditional big bank mortgage loans. Buyers willing to put up their home or other owned real estate can usually close on a hard money loan much faster and with way less paperwork. It's an option many in D.C. are finding helpful in their quest to buy and to renovate existing property as well.

Washington D.C. Foreclosure Law

While judicial foreclosures, managed in the court system, are possible in Washington D.C., but the vast majority of foreclosures there are managed outside of the courts, in a non-judicial process. And they move very fast. Foreclosure in the District of Columbia typically takes just two months, much faster than most other parts of the country.

Property Redemption after Foreclosure Sale

Some states allow the borrower to redeem or repurchase the home within a certain period of time after the foreclosure sale. In Washington, D.C., borrowers do not have the right to redeem a home after the foreclosure sale has occurred.

Deficiency Judgments in D.C.

When a home is sold in foreclosure, if the sale price is not enough to cover the borrower's debt, the lender can seek a deficiency judgment and force them to pay the remaining balance, even after losing their home. Washington D.C. allows this practice and a lender can file for this process after the foreclosure sale has been finalized. D.C. Code § 42-816

Deed in Lieu of Foreclosure

While many homeowners, faced with losing their property will ultimately walk away from their homes, there is a solution available for D.C. homeowners who don’t want to fight the foreclosure process. In the District of Columbia, homeowners are allowed to enter into a Deed in Lieu of Foreclosure agreement so that they can both avoid the legal foreclosure process. Basically, both parties agree to “call it even” while the homeowner voluntarily agrees to give over possession of their property to the lender. Many times, a “cash for keys” situation can also be negotiated, where the homeowner can get a small cash settlement to offset their moving costs in exchange for their participation in this agreement.

Grace Period Notice

Washington D.C. does have a sort of grace period built in to help homeowners try and save their home from foreclosure. The lender must mail a notice of default along with a mediation notice giving the borrower 30 days to elect mediation. If the borrower does not elect mediation (or participates in mediation but does not work out an agreement with the foreclosing party), the foreclosure may proceed. The foreclosing party then sends a notice of the intention to foreclose (including sale information) 30 days before the sale to borrower and sends a copy of the notice to the mayor. The 30-day period begins when the mayor receives notice.

Protections for Military Personnel

Washington D.C. does not provide special protections for military personnel facing foreclosure. There are federal protections in place for federal service members but nothing is specifically provided by the district.

High Risk Mortgage Protections

The District of Columbia does not provide special protections for people in high risk mortgages, those with high interest rates or big balloon payments. All homeowners in D.C. are subject to the same process and regulation.

Additional State Laws

The maximum interest rate allowed by law in Washington D.C. is anywhere from 6 to 24%. In the absence of an agreement, it is 6% per year (§28-3302); or by contract in writing it can be up to 24% (§28-3301).

D.C. is a homestead District. Under the District of Columbia exemption system, homeowners may exempt the entire value of their homes or other property covered by the homestead exemption. However, federal law places some limits on this exemption, depending on when you bought the home. If you bought your home within the 1,215 days before filing bankruptcy, your exemption is limited to $155,675. However, this limit does not apply to any value transferred from your previous principal residence, acquired prior to 1,215 days before filing bankruptcy, if that property was also in the District of Columbia. If you purchased your residence more than 1,215 days before filing bankruptcy, your homestead exemption amount is unlimited.

Lender Licensing Requirements

This license is required of any person who, on behalf of a District of Columbia mortgage lender, mortgage broker, or mortgage dual authority licensee, takes a residential mortgage application; offers or negotiates terms of a residential mortgage loan; or solicits or offers to solicit a mortgage loan on behalf of a borrower for compensation or gain.