required as part of the loan could be “fudged.” It was a cautionary tale of the perils of unchecked credit and the importance of relying on something more dependable than “documentation.”
THE EVOLUTION OF THE NEW PARADIGM
Out of the ashes of the Old Paradigm rose the New Paradigm—a dynamic and evolving landscape shaped by the lessons of the past. In this new era, lenders began to rely less on traditional documentation and more on automated underwriting processes. Lenders discovered that “loan payback” was more dependable if they lent to the “owner” of the business rather than to the business itself, even if the credit line or loan did not report to the owner’s personal credit profile. The focus shifted from PAYDEX Scores and business documentation to measuring borrower behaviors as reported on personal credit profiles, ushering in a new era of transparency and accountability.
NAVIGATING THE NEW PARADIGM
For real estate investors seeking the lowest-cost financing and funding in the New Paradigm, knowledge of the new rules is key. No longer can businesses rely solely on outdated metrics to secure credit. Instead, they must embrace a holistic approach that encompasses both personal and business credit profiles. By understanding the nuances of automated underwriting and leveraging their personal borrower behaviors, real estate entrepreneurs can position themselves for financing and funding success in the New Paradigm.
THE BENEFITS OF THE NEW PARADIGM
Although the transition from the Old Paradigm to the New Paradigm may
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