Note "flipping" Legal?
OK, I posted this last night, but it went bye-bye.
In Georgia, is the "flipping" of notes legal? By that, I mean doing the following:
- Find a seller.
- Gather information about the note.
- Look online to see what you could sell the note for.
- Deduct your profit and offer that amount to the seller.
- If the seller agrees to sell, get them to sign a sales contract with the obligatory "and/or assigns" clause.
- Schedule a double closing where the seller gets his money, the buyer gets the note, and (most importantly) you get your money.
My gut feeling is that this is legal because since I am under contract to buy the note, I am a principal in the transaction, and not a broker. If I had found the seller, the buyer, and put them together for a fee, I'd be a broker.
Anyone know if this is correct? I don't want to do to jail because my "gut feeling" was wrong.
You mean a simultaneous purchase and sale of a note if I read your post correctly. This practice is legal. Many note buyers dont like simultaneous closes, so finding one will be a challenge - maybe someone here knows of one Be sure the assignments are recorded in proper sequence to avoid clouding the title.
Thank you very much! Just what I needed to hear!
As long as you are a "principal" in the deal it's not illegal or if you are a registered broker with a particular investor who purchases the note. Hince I say registered with that particular company. But if you are doing double escrow you have nothing to worry about this works the same with the actual real estate too.
[addsig]
You might want to check out the Georgia "Predatory Lending Laws"
If the note falls under the Predatory Lending Laws criteria, even if you sell it, you would still be held liable.
Hope This Helps!
Mrs. Meltzer
While Mrs. M is right as rain, if the note's OK, and not usurious or otherwise predatory under GA law, sure, you can simo buy and sell, if a buyer's on hand.
These simo deals (A to B, B to C) are done daily and all escrow/title companies are quite familiar with the procedure, and keep all details of deal A completely separate and private from parties in deal B.