Taking out a mortgage from the bank is becoming more difficult. Instead of waiting out the credit crunch, a growing number of potential homeowners are seeking loans elsewhere: from their family and friends.

The Baltimore Sun reports:

” Your loan could prevent a loved one’s foreclosure, bankruptcy or other dire fate. You’d be a hero.

Then again, the borrower might never repay. You fume, the borrower resents your hints to repay and the relationship blows up…

Loans to friends and relatives are dicey. You can play it safe by saying ‘No’ to all loans or offering the money as a gift without expecting to be repaid. But if you do decide to play banker, set some ground rules for yourself and the borrower.”

Peer-to-peer lending (borrowing directly form individuals) is certainly risky and is an easy way to ruin relationships. However, mortgage servicing companies such as Virgin Money can help keep these transactions professional and ensure that the borrower is held accountable.

See Also:

Peer-to-Peer Lending Basics

List of Peer-to-Peer Lenders

Tags | mortgage servicers, Peer-to-Peer Lending, Virgin Money