Becoming A Liscensed Mortgage Lender/Creditor
I live in Florida and we have usury laws that limit unliscensed persons lending money to keep it under 18%. Does anyone know the degree of difficulty in becoming a liscensed lender with the state. From the statutes, it looks like you could charge up to 30% on a loan made that is backed by a mortgage.
I would like to look into loaning money to people in foreclosure that want to pay their reinstatement amount, granted there is enough equity to get covered if it does go to auction. There, obviously, is a high risk in doing this and would grant a return higher than 18%.
Any ideas.
There are fair lending laws naionally and in florida that apply to the homestead property and if it is a first mortgage. I have gotten fuzzy on this, but I researched it hard a year back because of a man that was taken advantage of by a sleazy lender. I got the lender to waive the prepay and remove about 20k from the payoff so that I would not report him.
I was thinking of lending to people in foreclosure a couple of years ago, but after speaking to several hard money lenders, they convinced me that you can only be greedy with non-owner occupied properties. there are too many laws regarding owner occupied properties so that you can not make much money - only a couple of points in originating the loan. plus you can only loan on their ability to pay. so if they are in foreclosure, and unable to make their mortgage payment because they lost their job, you can not make them a new loan unless they have the ability to make the new mortgage payment.
Look up
- Florida Fair Lending Act 2005 Statutes
- Session Bills 2262 2005-57 Florida Fair Lending Act
- FTC HOEPA Section 32 Mortgages / Federal Trade Commission Section 32 Loans
BTW - talk to your hard money lender. I am not aware of any any license that is required to lend money nor any license that gives you the ability to create special terms. I have done several loans with out any license.
thanks, i appreciate that..
Thanks for the feedback. I figured there was quite a bit more to it than I was led to believe.
Yes, you may buy notes, but usually you will need to have the cash to offer the lender a quick cash deal for less than 50 cents on the dollar,
One good thing about buying the note is that if the lender already started the foreclosure procedure, you can just take it over instead of starting from scratch.
Second good thing is that you now have become the bank and you will NOT be on title, which means, no seasoning on the deed, so you can do 2 things:
flip this property after you foreclose it or tell the home owner that you will forgive some of the debt in lue of repairs and maintenance of the property and get the title in lue of foreclosure. Now you own it all and you can sell it next day or do a lease option with $5K to $10K down. If the property has a second mortgage on it, just call the second lien holder and offer them 10 cents on the dollar to walk away. now you can make even more money.
I LOVE love local, non-performing notes. I go right to the persons door and ask what the situation is with the house. I let them know first that I just bought their loan and now I am the bank. Do they want to get a payment plan working or do they need to get out NOW. If they want to leave, I let them know that I will even GIVE them a few thousand or a few hundred $$ when they leave this weekend with the house in good shape and a deed to the house.
How cool is that?? I get the house for below 50% of FMV, the owners sign over the deed and clean the house for me. What a bargain. If the owners have been in the home for several years or more they will have paid the loan down some, the value has increased well over the loan amount, and then I am buying the loan for half (not half the value, but half the loan amount which is probably 70 or 80% of the value because of appreciation). End result, the purchase is for about 40% of the value of the home.
I have only done two of these, but I am always looking for more. I also do sub-tos, rehabs, L/Os, etc. It is just one more tool in your toolbox.
[ Edited by rickpozos on Date 09/18/2007 ]
Do you buy the notes from large lenders, or private individuals.
If the you foreclose and the house goes to auction, you could get outbid, correct? I have never thought that buying the note would let you end up with the house.
Once you own the Note, you have created instant equity (the discount). You can often grab the Deed from the Seller and start paying on the first. If it did go to auction, you can be outbid; however, you are automatically bid at the face value of the Note without having to actually pay anything out-of-pocket at the auction (plus your costs), so even if you are outbid, you have made a great return on your money.
[addsig]
That is, if you are buying the second, of course (take over the first).
[addsig]
regardless of your outstanding reputation and track
record in commercial design, if you want credibility in
this world, bring area specific experience and 20% -
25% of your own cash to the table. only then, will most
lenders even take a look at your project.
Thank you for your response, not very uplifting, but realistic (I guess).
Do you mean area specific:
Area as Location
Area as Type of Property
Thanks.
I have not done extensive research into SBA loans, thank you for that trigger.
We will be holding the properties for cash flow for at least 5 years.
The hard money would only be used for the skin on the deal, but the earnest deposit would be made by us, then the property would be submitted to a hard lender for the rest of the down payment during the due dilligence period.
Thank you for your response, it is definitely appreciated.
if the 2nd knows this thing is headed to a short sale or foreclosure, they will probably be happy to get out. you might even get it for less than you think.
i dont know how the bank holding your note works. all i can tell you is what i did on my last deal. we called the note holder, a small lender, and asked what they would take on the 2nd. they asked for about half the total value of the note. i paid cash, they signed off and then that left me to just deal with the work out coordinator from countrywide.
a tip i picked up.....they got really pissed when we told them we could do the deal by a certain date and couldnt. (it was the birdog that made the promise, i delayed the deal by a week to do the due dil.) they were nasty to deal with and because of the delay the added another $1000 to the original payoff. after it was done, they were surprisingly nice. i believe had we given them the correct timeline in the first place we could have avoided the xtra 1k.
for whatever that is worth.....
good luck, brian