The private lending industry is in the midst of major changes as it moves to drop “hard money” as a descriptive term with the goal of developing a more professional and institutional reputation. In the middle of this maturation is Leonard Rosen, the founder of the National Private Lenders Association (NPLA) and the annual Pitbull Conference, which draws investors, borrowers and lenders together to make deals and learn about the newest industry trends.
Scotsman Guide caught up with Rosen this past November. He spoke about how the shift to hard money is working and the role that NPLA is playing in protecting the interests of private lenders.
What impact did the hard money moniker have on the private lending industry?
For many years, it was negative. Hard money lenders were thought of as unscrupulous players who charged high interest rates and intended to steal your property. That is clearly not the case and not what the private lending industry is all about. So, I think the change from hard money to private lending better represents the industry.
Look, the industry has matured in the past 20 years since I started creating a marketplace for private lenders. At the time, there was nothing out there. So, I started a marketplace to bring investors, borrowers and lenders together in a medium where they could do business. That is how the Pitbull Conference was created.
We wanted to not only change the dynamics of who we are, but we want private lenders to be recognized as the good guys.
Why did you no longer support using the hard money term?
Because I never liked the term from the beginning. We didn’t like it 20 years ago, but we didn’t have an alternative to it. I started the National Private Lenders Association because there was no one in the marketplace protecting private lenders. I went to the biggest players in the industry and I told them that we wanted to not only change the dynamics of who we are, but we want private lenders to be recognized as the good guys.
The NPLA has made such a powerful impact, including helping to change the name of the industry from hard money to private lending. It may sound like a little thing, but it’s not. I can assure you, it is not a small thing.
What has been the reaction from your colleagues?
When it was first introduced in our meetings, there was some dissent from people who were concerned because they said “hard money” is better recognized on internet searches. I said that was only because “private lending” hadn’t been introduced as the terminology. Since searches now recognize the term, the number of searches using “private lending” has increased and the number of searches using “hard money” has decreased. I told people at our meetings that they just had to give it time. The search algorithms will change. And we were proven right.
Are there other industry terms you would like to change?
One of the initiatives I have is getting rid of “fix and flip” and instead calling it “investor rehab.” That term has a much cleaner kind of tone. I never liked “fix and flip.” I find it offensive. So, that will be the next step. There are a half-dozen terms that are on the drawing table, but they haven’t been introduced to the membership base yet. So, I’m just not at liberty to discuss them yet. But clearly, “fix and flip” has got to go.
The NPLA has become an effective lobbying force. What are some recent victories?
We’ve had many, many victories, but two big wins included stopping New York’s anti fix-and-flip legislation in 2020. The bill would have imposed a 15% to 20% conveyance tax on one to five separate residential units in parts of New York City. It would have wiped out the local fix-and-flip industry. We lobbied Gov. Andrew Cuomo’s office and were able to stop the bill in its tracks.
More recently, we stopped a New Jersey bill called the Community Wealth Preservation Program Bill. (According to NPLA’s general counsel, the bill would have revised the sheriff’s procedures for the sale of residential foreclosure properties and reduced the deposit required at the time of a sheriff’s sale from 20% to 3%). The bill would have basically shut down lending in New Jersey. We explained to Gov. Phil Murphy that the bill was extremely flawed. He vetoed it and sent the bill back to the Legislature with suggested amendments. Those were huge, huge wins for the private lending space and for the NPLA. ●
