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Frequently Asked Questions About Trust Deed Investing


Question

Why would a borrower choose to use a private money lender – and pay a higher interest rate?




Question
Are trust deed investments FDIC Insured?

Answer

There are many reasons why a borrower would prefer a private loan to a bank loan. Most often, speed, service and flexibility are priorities.


Answer
FDIC insurance only applies to bank deposits. Trust deed investments are not FDIC insured. For example, if a borrower needs a loan closed within 30 days, this is generally impossible for a commercial bank. Short term loans (e.g., one to five year term) are also typically outside the specifications of conventional loans. Or, sometimes a borrower may have minor credit issues – unlike a bank, a private lender can assess the potential risk and vary the terms to make a profitable loan in these situations.
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