HAVE AN IDEA - Posted by Sharonda

Posted by Brad Crouch on December 15, 1999 at 03:57:22:

Hey Ben,

Wouldn’t this be the same as a notebuyer buying a 2nd mortgage? What about the old standby, “as long as you are a principal in the deal, no license is required”?
I would think that especially if you did not do this as a regular business (for others), there would be no problem.

With a “referral fee” arrangement with a loan officer, I would think this could be a good “program”.



HAVE AN IDEA - Posted by Sharonda

Posted by Sharonda on December 14, 1999 at 18:15:51:

I just had an idea. As a loan officer I frequently came across people that had delinquent taxes and were willing to refinace to become current. However many of these I just could not fit into my guidelines even when there was an extremely low LTV. My thought is this: what if a private individual offered to “refinance” their property and hold the new mortgage? First off I don’t know if this would make someone a “lender” thereby making them subject to bank regulations. But if it didn’t would it then be feasible to do this and hold this note for some amount of time or sell this note for a small yield? If this is feasible then I am ready with two clients. If not maybe someone can offer some advice. Thanking you in advance!!

Good idea - Posted by Ben

Posted by Ben on December 14, 1999 at 18:51:30:

I do a similar thing (albeit involuntary) in that I buy
delinquent property tax liens at municipal auctions and now the property owners owe 18% interest to me instead of the town. You could target people who already have high interest liens (say 18%) and offer to help them pay off the liens, refi and charge them say, 10%. You would be saving them from possible foreclosure, saving them alot of interest charges and making a decent return yourself. It would also be easy to find these people because every lien is recorded at the county courthouse and also advertised in the paper before it is sold (at least in NJ).You may be right though about running afoul of banking regs, in fact you may even need a mortgage banking license since in essence what you are talking about is mortgage lending.

Forgot to mention… - Posted by Ben

Posted by Ben on December 14, 1999 at 19:06:20:

depending on your state the mortgage banking regs may have an exception allowing you to do two or three deals per calendar year without having to have a mortgage banking license. Therefore you may be ok with the two deals you have on the table. Check out your state’s laws. I have also heard of people setting up
different entities with EACH entity doing the maximum number of deals per year thereby circumventing the license requirement. However, check everything out yourself before proceeding, the penalties can be atrocious.