I find this very interesting, and a step in the right direction. Hard money lending has always followed the Golden Rule: He who has the gold makes the rules. Hopefully this will keep some of the predators at bay since hard money is one of the last viable options for creative financing these days.

The American Association of Private Lenders (AAPL) has established the first code of ethics for private hard moneylenders in the United States.

Borrowing from a hard moneylender is becoming increasingly common as it grows more difficult to get mortgage and small-business loans.

Key sections in this code of ethics include stipulations about strictly adhering to all related real estate lending laws, nondiscrimination in lending, and honesty in all dealings. A copy of the full code can be seen here.

Hard money lenders provide short-term, real estate-backed loans that provide funding based on the value of the underlying real estate. Interest rates are typically higher than banks because they fund deals that don't conform to bank standards.

Source: American Association of Private Lenders (09/08/2010)