Legalities of mortgage note investing
Hey everyone. I was wanting to know the legalities of bird-dogging mortgage notes from private investors in the state of NC. When I do the google researches, all I see is "Illegal activity" related content. I'm not sure if I'm not being clear enough for google to answer my questions correctly, or if it is illegal with no license. Any and all feedback is appreciated!
If you're asking can you find seller finance mortgage notes and then put them under contract and assign the contract to a note buyer, then the answer is yes. We buy seller finance mortgage notes and institutional mortgage notes.
#2 Real Estate Deal Analysis & Advice Contributor
- Wholesaler, Rehabber and Landlord
- San Antonio, TX
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#2 Real Estate Deal Analysis & Advice Contributor
- Wholesaler, Rehabber and Landlord
- San Antonio, TX
If I see someone selling forks for $1 each and I know that I can sell them for $2 each what is wrong with getting 1000 of them under contract and selling the contract or just selling them the forks?? Lets make some $$$. Its the American Way.
You can wholesale anything. EVERYTHING at the grocery store has been bought and sold at least 2 or 3 times. Cars are basically wholesaled to the dealers who sell them at retail price. Clothes are wholesaled through Walmart or Ross or any department store. Just be prepared to close on the deal.
If you contract, dont get a bad name for yourself by backing out on deals.
What you suggest is effectuating the transfer, as in transacting or brokering, of a security instrument. All NC laws (NC General Statutes) related to securities are spelled out in Chapter 78A. North Carolina Securities Act.
Related to your post, a transaction of a security interest in real property would be an exempt transaction, per § 78A-17. Exempt transactions, which says:
Except as otherwise provided in this Chapter, the following transactions are exempted from G.S. 78A-24 and G.S. 78A-49(d):
...
(5) Any transaction in a bond or other evidence of indebtedness secured by a lien or security interest in real or personal property, or by an agreement for the sale of real estate or chattels, if the entire security interest or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit.
Since you would be brokering these deals, and (apparently) not servicing the security instrument, Article 10, Mortgage Debt Collection and Servicing, of Chapter 45, Mortgages and Deeds of Trust, would not apply to you. Your buyer, though, should know these chapters of NC law as well as federal servicing laws.
Note that by NCGS §45-90(2) (Definitions) a NC "servicer" is defined in RESPA, the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(i). Also note that RESPA applies to federally related mortgage loans, not notes from private investors.
So, in the context of your post, I don't see any "illegal activity."
This post is not to be construed as legal advice. This post is for entertainment only.
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#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
Quote from @Rick Pozos:
If I see someone selling forks for $1 each and I know that I can sell them for $2 each what is wrong with getting 1000 of them under contract and selling the contract or just selling them the forks?? Lets make some $$$. Its the American Way.
You can wholesale anything. EVERYTHING at the grocery store has been bought and sold at least 2 or 3 times. Cars are basically wholesaled to the dealers who sell them at retail price. Clothes are wholesaled through Walmart or Ross or any department store. Just be prepared to close on the deal.
If you contract, dont get a bad name for yourself by backing out on deals.
Rick just fyi broker notes is not legal in all states.. most yes but some no.. so we cant make blanket statements for the entire country just say in.
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- Investor
- Northern Virginia
Quote from @Joshua Kim reid:
Hey everyone. I was wanting to know the legalities of bird-dogging mortgage notes from private investors in the state of NC. When I do the google researches, all I see is "Illegal activity" related content. I'm not sure if I'm not being clear enough for google to answer my questions correctly, or if it is illegal with no license. Any and all feedback is appreciated!
without getting into legalities, being a mortgage note broker is not a very profitable business model. There are very few individuals (I can count on two fingers) who have been able to be successful in brokering loans, and that is because they used to be buyers and no the values and are very experienced.
