Note broker license needed in PA? - Posted by Angela

Posted by Shambhu Nath on September 13, 2003 at 24:26:47:

If mortgage brokers are licensed to originate loans in PA, does that also allow them to buy and sell notes; as mortagages are also notes?

thanks

Note broker license needed in PA? - Posted by Angela

Posted by Angela on September 10, 2003 at 21:34:06:

I have not been able to get any concrete answer for any, but do you need a license to help a seller create and then sell their mortgage in PA?

Re: Note broker license needed in PA? - Posted by David Butler

Posted by David Butler on September 11, 2003 at 17:20:33:

Hello Angela,

Problem with getting “concrete” answers in general, is that they often require “concrete” questions to answer. This is especially so when dealing with contract issues, notes, real estate, law, and business.

Go in to any knowledgeable real estate mortgage attorney’s office, and he could not answer your question as present, with any concrete specifics - at least, if were to give you the right answer! Instead, he would have to ask you many questions about the deal itself, and your intended role in it.

In addition, to adequately review all of the considerations that may come into play here would take a full afternoon or longer. Fortunately, that’s already been done, one way or another, right here in this Forum, by way of previous discussions… so you’ll want to explore those to put together, if you desire the full boat! :wink:

You can do that by entering such terms as “license”, “licensing”, “licensing requirements” and similar terms as your keywords in the “search” facility at the top of this Forum.

And you can use the same process for researching the factors that need to be considered for “creating notes”, “creating notes to sell”, “seller’s exemption”, “ostensible loan”, “arranger of credit”, “usury”, “camouflaged loan”, “simultaneous close”, “safe harbor”, “consumer protection”, “disclosure”, for becoming aware of the caveats when “helping” a third party handle certain legal affairs.

Some quick general answers here… no states regulate the buying of notes as far as we can tell in our years of researching the topic.

The selling of notes is regulated in less than a handful of states, and those that do regulate this activitiy, generally have rules governing the “selling” of specific types of notes: based on the type of property, type of loan generating the paper, and/or seller or buyer status. These states also clearly spell out the numerous exceptions to the rules in their published codes.

For Pennsylvania, generally speaking, a secondary mortgage Loan Broker License is required if selling more than two (2) notes in a year, "secured by mortgage/deed of trust in ‘second position’ on residence, if ‘not purchase money mortgage’, and ‘original balance greater than $5,000’. No license required otherwise.

You are talking about a seller-carryback purchase-money mortgage here, so no license required.

On the other hand, no idea what you specifically mean by your statement “to help a seller create and then sell their mortgage in PA?” Help how, and do what are the VERY CRITICAL questions here… and the answers are spelled out in a number of those posts I mentioned above. Lot of technicalities to be aware of in this regard… so be very careful that you fully understand all of the nuances involved.

Hope that helps you get headed in the right direction, and best wishes for your success!

David P. Butler