A Dodd-Frank Question

[Brittany P.]

Hi All,

Question for you pros, and maybe I'm thinking too deeply on this, but does Dodd-Frank (or its attendant regulations) set any restrictions on purchasing mortgage notes, or only on loan origination?  What about any impositions on contract-for-deed purchases/origination?  Much thanks to anyone who can weigh in with their expertise.

[Jamie Bateman]

As others have indicated, it is typically the state licensing/compliance that becomes the focus in buying notes/CFDs. In general (not legal advice), in most states you **should** be okay to purchase notes without a license (if the loan was properly originated). There are definitely exceptions to what i just said. GA, for example, requires a mortgage lender license. Whether or not the state actually enforces that in all situations is another question. Using a licensed loan servicer protects you in many cases, as well. 

Sometimes when modifying a loan, if you are increasing the P+I, that could be considered a refinance, requiring you to re-underwrite (due to Dodd-Frank's requirement to show the borrower's ability to repay). 

In general, the NMLS should be your compliance/regulation guide, as it compiles tons of state-level requirements. Overall, I would say not to let the compliance piece scare you away.