Convention was incredible! Question on lender pooling?? - Posted by JoeB(Atlanta)

Posted by Glenn OH on February 29, 2000 at 21:21:56:

I am not a lawyer, but check into this as a solution. I would look at forming a limited partnership to pool the money, and have the partnership create the mortgage for the property. With all of the investors known personally, I think you would not have any sort of SEC involvement. You might even see if the investors would want to invest in their IRA’s to get the income tax free or deferred (Roth vs standard IRA).

Convention was incredible! Question on lender pooling?? - Posted by JoeB(Atlanta)

Posted by JoeB(Atlanta) on February 29, 2000 at 14:23:31:

Hi everyone, WOW the convention speakers and their ideas were incredible. The energy and knowledge of the particpants was just as incredible! Don’t miss any future conventions!

My question was about a concept that I believe is referred to as ‘lender pooling’. I’ve seen it discussed here in past, but the archive posts I found didn’t have anything ‘concrete’ in them.

We have lots of private lenders that loan us money for our rehabs, and we’ve gotten several new ones who only have $5,000 to $10,000 each. We’d like to combine several of them into one mortgage (they don’t want to be in 2,3,4,5,6th positions with separate mortgages).

I believe some of you mentioned this may be illegal or regulated by SEC…is this true? If so, could you point me to a webpage that might discuss the details?

I’ve also heard of investors that put some of their personal money into the ‘mortgage pool’, making themselves a partner in the mortgage. Does this make it OK/legal? Or is this only applicable when we’re brokering the loan and not actually the borrower ourselves??

Thank you very much for any details,
Joe Brillante

Re:Question on lender pooling?? - Posted by JPiper

Posted by JPiper on March 01, 2000 at 18:14:07:


Don’t know how I missed meeting you at the convention…maybe next time.

Be careful with this one…if you violate either state or federal securities law there are both criminal and civil penalties associated with it. It would be worth getting an opinion locally from a securities attorney.

A note is a security. Many states provide an exemption for a note secured by real estate. Chances are you can find your law by going to…and then selecting your state. Check out the exemptions there under the securities law section.

The idea of limited partnership is a poor idea. Limited partnership interests are securities…and are not secured by real estate.

One idea that was advanced by Merle Woolley in the past was that you executed separate notes to each investor…and then secure them all with one trust deed. But before you attempt this, again, I would suggest that you run this idea by your securities attorney. Another question is whether this can be publicly offered.