BiggerPockets

I heard that there is no license needed to broker private/ hard money loans, Is there any truth to this? I know that you don't need one in the commercial sector. Is there one needed in the residential hard mney sector?

100% Dependent on your local gov. In Colorado, you must be licensed

you are correct, but getting a LO Lic will help.

If you don't have one and things go the wrong direction it can be an issue...in most states anyhow.

Once you get your license, call me. I have incredible buying opportunities and dont want to always wholesale everything. Its time for me to build my own portfolio instead of my investors.....

In Texas you MUST be licensed to originate ANY 1-4 family residential loan.

Good Luck!

It seems to me that it is all depends on who's money is it. If this is your own private money I don't see any reason why wouldn't you be able to lend it to whomever you chose without a license and as long as you disclose the terms of the loan up-front. If this is investment money that you lend to others, i.e. other people's money, the license requirement would make sense.

Glad that's cleared up! I'm wondering who is going to be teaching the 6 hours of instruction for loan originators. To HUD a non-conforming loan is one that doesn't meet secondary requirements, has a thirty year amoritization, no balloon payment prior to half the equity being paid down and is fully amortized. I'm afraid that people will be doing sale contracts with a expiration date and the sale contract can be made again if an additional deposit to the purchase price is made. That, or they are going to finance an option contract and never secure it with the property. I might even lower the price a house if the buyer likes one of my paintings, yes, I paint, and they are very expensives, so expensive, to sell one to most people I'd have to finance it!
Alot of what this is about is not a safeguard for consumers as claimed, in my opinion, but a way to make it very hard for the small mortgage broker to survive. If you read the SAFE Act, you'll see that regulators can come in an examine the broker's business. Having been a bank examiner with FDIC, I can tell you that examinations are very expensive. Paying for the exam is put on the party being examined! In addition to that, brokers will have a loan report, like a bank call report which is more time consuming than a tax return. In a bank, only employees and officers with knowledge in preparing the call report may complete the requirement. Another expense. It's really about banks getting rid of some thorns in the side and reducing seller financing. Why, banks want real skin in the game, real equity for a 75% LTV loan, to date, a soft second filled the gap allowing a borrower to get in under the rules, but was more likely to walk away. OK, get a mortgage broker to "originate" the loan for you. Let's look at that. Who says what's in the loan terms, after you pass your mark, if you are not a licensened originator, you're not to discuss loan terms, sounds like it's a take it or leave deal, if you can find a broker in your area willing to do it. You think it will be expensive, you bet it will be, the broker has a liability in your deal now, until it's fully paid! Just wait for a borrower to cry foul. Banks can not assist in underwriting a private loan, for that very reason and they are not a party to the transaction. Wait til you hear your local Habitat For Humanity start crying over this on the 5th house they build and sell! Non-profits are not exempt! That goes for neighborhood assistant programs too!
So, do you need a license? I think you do if you're going to do any business, The SAFE Act is some smoke screen and it's like swating flies with a sledge hammer! Bill

PS. I may lend my talents to lending assistance in providing alternatives to this for the fun of it! HUD is like turning a battleship when I'm bouncing along on a jetski! Been there, done that!

Ok, So here is a question since we are on the subject. If my company hold several properties. Can I, as an individual or through another entity, can make a loan financing those properties without having a license?
Another word, I'm the sole proprietary owner of a company that own several properties (All free and clear). Can I finance (i.e. record a loan) those property either myself or through another sole proprietary entity?

Anyone?

Scott,

Consult with a Board Certified Real Estate Attorney such as Gaylene Lonergan with http://www.lonerganlaw.com/ or call the Texas Savings and Loan Dept. http://www.sml.state.tx.us/index.html I am 100% sure about the licensing requirements for HMLs in TX.

Good luck!
Rob