New Private Lending Bill Being Pushed In Florida

Private Lending & Conventional Mortgage Advice

New Private Lending Bill Being Pushed In Florida

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

http://m.flsenate.gov/session/bill/2018/935/billte...

Looks like the special interests are at it again. The governor shot down the last bill stating it was the most restrictive in the county. This one appears to be so as well.

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Jeff S.

Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes

In spite of your governor's hyperbole, this bill is hardly the most restrictive in the country, @John Thedford . Have you ever seen what it takes to lend in Nevada?

I'm no fan of government intervention when public safety is not at risk, and especially when many of the protections in this bill are already covered by federal law (predatory lending, etc). It appears however, you could easily turn this into your interest by simply becoming licensed.

By my read of the requirements , these require filling out a simple 10-page form and $825. Certainly, you don't think that's onerous, do you?

Depending upon your point of view, one nice thing about licensing is that its a barrier to entry and will limit your competition. Once licensed you could then rail about unlicensed lenders in FL as you do here about wholesalers in your state.

"As I stated, if they did go through a LMO, the only thing that would change would be the associated costs."

It's not clear that you could "go through a LMO." Nowhere do I see that an LMO can originate loans for others in Florida. This is something you would have to discuss with a knowledgeable lending attorney.

We have a similar license in CA. It's called a California Finance Lenders license (CFL). It allows you to originate your own loans using your own money and only for yourself. You can sell your loans but only under limited circumstances and mainly to other CFL's. A CFL license allows you to advertise, which to me means being able to speak and present about lending at real estate clubs as well as calling ourselves lenders on our business cards and email signatures. Most importantly, CFL's enjoy the coveted exemption from California's usury rules.

No one like government intervention like this, except maybe the banks and other self-interest groups. This appears to be something you could easily turn to your advantage, however.

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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
What's so bad?
Section 1. Business purpose is defined by CFPB ... haven't looked at it but it might be okay.
Section 2. Can't advertise without a license ... think that's what it's saying.
Section 3. Can't defraud people ... that's reasonable.
Section 4. There are penalties if violation of the law ... reasonable.
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Mike Snyder
Seminole, FL · Member since 2017 · 86 posts · 39 votes
8y
Not quite getting that myself @John Thedford. Is there an issue with the provisions listed in section 4? Not sure what you are referring to?
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Many private and HML lenders do business purposes loans for investors. This bill would require privates to go through a LMO to do the loans. More money in licensees pockets..less for the actual lenders. This bill is very similar to the one the governor shot down last year that would have required individuals, even parents lending their children money, to go through a LMO. VERY restrictive and I don't see any legitimate purpose in the bill. I believe it was instituted by a LMO down in the Miami area that wants to force privates to go through LMO.
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
@Mike Snyder
As a matter of fact I am doing a 100K loan tomorrow. Same borrower that has used my services several times. VERY good flipper...pays on time..happy to have me helping him. This bill would force me to go through a LMO to do loans for him. That would serve no purpose but to dilute my profits and force me to raise my rates.
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
Where does it say you have to go through a LMO?
Looks like, and I could be wrong, if you don't advertise and stick to business purpose no license is required ... same here in CA.
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
OK...strictly to the letter of the law...read their definition of "advertising".
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
I am a member and corporate sponsor of our REIA. I get to stand at each meeting and introduce myself and my services. According to the proposal, I could no longer promote my services. Even people that use their IRA or 401K through some custodians would be shut down unless they went through a LMO.
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
The law currently says one may not hold themselves out to the public as being in the mortgage lending BUSINESS. This is why my ads state I am not a mortgage lending company, lending MY OWN FUNDS FOR MY OWN BENEFIT. That is the current exception in the law where a license is not required.
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
Same restrictions here in CA. One unlicensed private lender I know puts $ signs on his name tag ... thus not advertising but letting people know. During the networking time at the REIA he gets into a conversation and lets them know what he does ... not advertising. The word gets around. No advertising. No problem. Yes, you could theoretically get in trouble if you stand up an talk but doubtful.
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Account Closed:

Same restrictions here in CA. One unlicensed private lender I know puts $ signs on his name tag ... thus not advertising but letting people know. During the networking time at the REIA he gets into a conversation and lets them know what he does ... not advertising. The word gets around. No advertising. No problem. Yes, you could theoretically get in trouble if you stand up an talk but doubtful.
That IS the point. I have no intention of doing anything that could get me in trouble with the authorities. That $ on the name tag IS advertising if the state wants to push it. The bill stinks. I could understand if there was a legitimate threat or harm being done to the public but I don't believe that is the case, Just as in my case, and many others, we lend to investors. We aren't violating DF..and I am careful not to do so. But flippers/investors often need funds..and we fill that gap. What would be the difference if we did it on our own OR went through a LMO? Only less money in our pockets OR higher rates for borrowers. I see NO benefit to the public.
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
@John Thedford
Ok, if that's the way you look at it. To each his own.
One other thought: In CA you don't need a LMO license to originate business purpose loans a real estate license will do and it looks like you are a re licensee. Might look to see if it's the same in FL.
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Mike Snyder
Seminole, FL · Member since 2017 · 86 posts · 39 votes
8y
So @John Thedford, just to be sure I understand, as you see 935 it is only OK to mention your lending services if it comes up organically as part of a conversation with one or several people (regardless of whether you are in any group or organization)? But, even if you are in a publicly accessible private organization, you would be in violation if you just told the group that you provide lending services? Regardless of what any lawyer could/would/might argue it that the basic result you see with it?
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
@Mike Snyder the way I look at it offering the loans IS advertising for loans. The language is so restrictive in the bill I believe the state could go after anyone doing private loans unless they are originated through a LMO. As I stated, if they did go through a LMO, the only thing that would change would be the associated costs. The loans could still be made.
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Jeff S.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
8y
In spite of your governor's hyperbole, this bill is hardly the most restrictive in the country, @John Thedford . Have you ever seen what it takes to lend in Nevada?
I'm no fan of government intervention when public safety is not at risk, and especially when many of the protections in this bill are already covered by federal law (predatory lending, etc). It appears however, you could easily turn this into your interest by simply becoming licensed.
By my read of the requirements , these require filling out a simple 10-page form and $825. Certainly, you don't think that's onerous, do you?
Depending upon your point of view, one nice thing about licensing is that its a barrier to entry and will limit your competition. Once licensed you could then rail about unlicensed lenders in FL as you do here about wholesalers in your state.
"As I stated, if they did go through a LMO, the only thing that would change would be the associated costs."
It's not clear that you could "go through a LMO." Nowhere do I see that an LMO can originate loans for others in Florida. This is something you would have to discuss with a knowledgeable lending attorney.
We have a similar license in CA. It's called a California Finance Lenders license (CFL). It allows you to originate your own loans using your own money and only for yourself. You can sell your loans but only under limited circumstances and mainly to other CFL's. A CFL license allows you to advertise, which to me means being able to speak and present about lending at real estate clubs as well as calling ourselves lenders on our business cards and email signatures. Most importantly, CFL's enjoy the coveted exemption from California's usury rules.
No one like government intervention like this, except maybe the banks and other self-interest groups. This appears to be something you could easily turn to your advantage, however.
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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
8y
Originally posted by @John Thedford:

Many private and HML lenders do business purposes loans for investors. This bill would require privates to go through a LMO to do the loans. More money in licensees pockets..less for the actual lenders. This bill is very similar to the one the governor shot down last year that would have required individuals, even parents lending their children money, to go through a LMO. VERY restrictive and I don't see any legitimate purpose in the bill. I believe it was instituted by a LMO down in the Miami area that wants to force privates to go through LMO.
The good news for you is that most residential lenders want no part of private $40k hard money type loans.
If you do more than 2 a year, it'll likely make sense to simply get your license. And then market your services to aforementioned parents, etc. When life gives you lemons....
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Jeff S. would the FLA licensee then have to take the national test and register with NMLS
Oregon and NV are the same as this..
and @Account Closed I don't think your friend can be lending a lot of money or lot of deals without a RE broker license or CFL as Jeff stated.. you cant be doing any volume and not have one of those licesnes pretty sure.. when I had my HML company in Oakland I ran it with my CA brokers license.
NMLS has thrown a wrinkle into this following dodd frank I think there are 12 states that have the same rules.
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
@Jay Hinrichs
My friend lends his money only. It doesn't take many loans in So Cal to saturate even a wealthy person. If you do any volume at all you need a broker's license for sure. No NMLS required in CA when doing business purpose loans, only REB (Real Estate Brokers) license.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Account Closed I am aware of the real estate broker licesnes in CA allows for business purpose lending I am one.. and have done many over the years.
I just don't think private individuals can wink and nod and make loans in CA legally.
and I think the risk they take is some borrower crams them down once they realize they should have been licensed.. a company in WA. ( were you need no NMLS or state license for business purpose did a bunch of loans in Oregon and got caught ) paid a HUGE fine.. and one guy I know cramed down his pay back to the point of only paying back principal.. not as bad as usury but still not good.
but this all got me thinking and I hoped on NMLS today and renewed my NMLS licesne for Oregon.. even though I don't use it .. I don't want to lose it the test is a pain in the butt.
Nevada is very tough.. I made one comment about looking for someone to do a loan for me there and I got a nasty gram from the state.. so either someone turned me in or they troll BP... and I see fake lenders with vegas address's all the time I bet they get shut down frequently.
Anyway.. if FLA needs a license I guess that's what you do.
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Jeff S.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
8y
I'll add to David's response on this one because I'm pretty certain I know who he's writing about. Early on, when we first started lending and used a broker to perform our originations, we asked our attorney if we could advertise at all and he gave us an emphatic, "NO." Not even on a business card, and certainly no public speaking. Our attorney did allow that putting a $ sign on a nametag was vague enough since it really didn't convey anything.
Since then we became licensed as CFL's but only because I wanted to present at the local real estate clubs. If you want to know a secret, even though we are licensed, we still use our broker. It's just too easy for us to do anything else. Plus, he's forgotten more about lending than most brokers I know and I like the backup opinions.
I couldn't begin to guess whether FL will require an NMLS registration for business purpose loans. I know NV does and by your assertion, Jay, so does OR. California does not. Requiring a lending license does not automatically mean that certain states also require an NMLS registration for business purpose loans.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Jeff S. that's the way I understand it as well.
NMLS is a royal pain.. if your actively lending you have to do whats called quarterly mortgage call reports on their system. and for someone like me who is clueless .. their website is so difficult.. I have to call the help line each quarter and spend 45 minutes with the nice girls there walking me through how to fill the stupid thing out and I have been doing it for almost 10 years LOL.. so today I called them again to renew my license.. they know they have to keep that help line there .. that website is just so tough.. at least for us old people.. :)
State of CA has some nice disclosure documents right on line for RE brokers makes the loans simple. those I know how to use without help :) and its why I keep that license current. I got it in 1977 so don't want to lose that one..
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
"I just don't think private individuals can wink and nod and make loans in CA legally."
@Jay Hinrichs
It's absolutely 100% legal to make business purpose loans from your own money in CA without a license. IF ... you don't advertise (B&P code), don't charge more than 10% interest (Usury), and do less than 8 loans / year (B&P code).
Cram downs and lien stripping are a bankruptcy thing, nothing to do with having a license.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Account Closed yes with those caveats I agree.. same in Oregon you can do 3 a year and no more than 7 in your portfolio.. and do not advertise.. but the reality is most that do this .. troll the RIA meetins for business.. but anyway.. enough on that..
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David Weintraub
Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
8y
Originally posted by @Chris Mason:

When life gives you lemons....
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John Thedford
OP
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Jeff S.:

In spite of your governor's hyperbole, this bill is hardly the most restrictive in the country, @John Thedford . Have you ever seen what it takes to lend in Nevada?
I'm no fan of government intervention when public safety is not at risk, and especially when many of the protections in this bill are already covered by federal law (predatory lending, etc). It appears however, you could easily turn this into your interest by simply becoming licensed.
By my read of the requirements , these require filling out a simple 10-page form and $825. Certainly, you don't think that's onerous, do you?
Depending upon your point of view, one nice thing about licensing is that its a barrier to entry and will limit your competition. Once licensed you could then rail about unlicensed lenders in FL as you do here about wholesalers in your state.
"As I stated, if they did go through a LMO, the only thing that would change would be the associated costs."
It's not clear that you could "go through a LMO." Nowhere do I see that an LMO can originate loans for others in Florida. This is something you would have to discuss with a knowledgeable lending attorney.
We have a similar license in CA. It's called a California Finance Lenders license (CFL). It allows you to originate your own loans using your own money and only for yourself. You can sell your loans but only under limited circumstances and mainly to other CFL's. A CFL license allows you to advertise, which to me means being able to speak and present about lending at real estate clubs as well as calling ourselves lenders on our business cards and email signatures. Most importantly, CFL's enjoy the coveted exemption from California's usury rules.
No one like government intervention like this, except maybe the banks and other self-interest groups. This appears to be something you could easily turn to your advantage, however.
You just be talking NV law. FL is quite a bit more restrictive. We have to take classroom, state test, etc to get a mortgage license. I know last bill, the governor vetoed. Hopefully this time as well. If he does not, I will simply have to go through a MLO and either eat the fees or try and pass them on. It won't stop me from making the loans.
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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
Looks like this thing is law now:
https://www.flsenate.gov/Session/Bill/2018/00935
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