Another group of lenders is made up of private investors. Unorganized and operating separately, their practices are, of course, even less standardized than those of mortgage companies. Frequently they are inclined to follow the methods of lending institutions in their communities. Since they are not handling the funds of others, however (except where they act as trustees) they have greater freedom of action than most of the institutions and are often found willing to advance a higher percentage of property value than are banks, trust companies, or insurance companies, especially where they have an opportunity to obtain an unusually favorable return.
The home-owner who finances through an institution can usually depend on being able to renew his mortgage, especially if he has decreased the loan principal by means of installment payments. There is frequently less assurance of the permanence of the loan obtained from a private investor. A change in the plans or circumstances of the lender or his death may result in an unexpected failure to renew the loan. This sometimes creates an exceedingly embarrassing situation for the home-owner in a community having limited mortgage facilities. In this connection it may be mentioned that trustees sometimes have limited power in the matter of extensions and renewals.