Using a licensed MLO to originate seller financing loans

[Account Closed]

There have been several threads here on BP lately about the legality issues when seller financing to consumers. New, apparently stricter federal regs are in place to start 1/2014.

I've posted before that I've been offering seller financing only to investors the last few years as those loans are exempt from the Safe Act and Dodd Frank. However, I have a cash offer in front of me for a property I'm selling. The buyers will live in the property and have cash from an inheritance ($150K). They are $10K short to make the deal work for me. I'd be happy to carryback $10K for 60 months at 6% interest with no prepayment penalty...in first position. How can I do that and be in compliance with all the regs?

I'd like input and experience on using a licensed MLO to originate loans on my seller finance deals to owner occupant consumers in CA. Does using a licensed MLO to take the application really keep me in compliance with the regs? Who are these MLOs that will do such originations for a fee?

[Bill Gulley]

Pat, you're treading on violations on many fronts with side deals done in the time frame of a RE transaction, there is no sneaky way around it that won't or can't get you in trouble.

Best way to find a RMLO is to call the state finance department about a list of regulated lenders. You also need to ask about the origination by RE brokers in CA as you have some exemptions. I also suggest you find a mortgage servicer and assign the servicing the minute it's made.

An attorney can originate the loan, if you can find one who will, they will need to follow prudent lending practices as well and do the processing. :)