Georgia licensing requirement for purchasing notes?

10 Replies

An associate forwarded the following info about Georgia licensing requirements for note buyers. Based on the language it seems that an individual would be exempt since it is "solely as an investment". I'm not clear though where they draw the line on business vs. "an investment".

Any comments or insights?

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The Georgia Licensing Department is requiring the servicer of GA loans to verify the owner’s status (per O.C.G.A 7-1-1001):

1.Any person who purchases mortgage loans from a mortgage broker or mortgage lender solely as an investment and who is not in the business of brokering, making, purchasing, or servicing mortgage loans is NOT required to have a license to own the loan. If the loan is on property that is a rental or vacation home, a license is NOT required to own the loan.

2.If the loan is on a primary residential property the lender/buyer/owner of the loan, excluding the above exceptions, must have a Georgia Lender License. 

Medium rcm circleBob Malecki, Resolution Capital Management | 360.850.1252 | http://www.rcm.company | Podcast Guest on Show #211

Holly Molly  so if a note buyer is buying and Owner occ note they must be licensed... that does not seem right... Notes are sold to note buyers all over the world..

I understand that the mortgage broker needs licensing and that the owner carry back after 4 or so probably needs to run it through a broker.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

My approach is to always use a licensed servicer.  With that I am not worried about owning notes in any state.

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

My skills at understanding legal language are questionable at best, however, the below seems clear to me.  If you are purchasing solely as an investment you don't need a license.  If you are a servicer you would need one.

Any person who purchases mortgage loans from a mortgage broker or mortgage lender solely as an investment and who is not in the business of brokering, making, purchasing, or servicing mortgage loans is NOT required to have a license to own the loan.

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

Good point, although the language seems contradictory in that "any person who purchases" and "is not in the business of .... purchasing... mortgage loans" does not require licensing. I suppose we would presume that "in the business of" would indicate a company such as a servicer or loan brokers like Granite or Kondaur. 

Medium rcm circleBob Malecki, Resolution Capital Management | 360.850.1252 | http://www.rcm.company | Podcast Guest on Show #211

@Mike Hartzog  

@Bob Malecki  

And it excluded Owner occ   as in the notes must be non owner occ for no license requirement Notes are sold all over the place to all manner of investors... IE private folks making an investment they can't possibly be licensed.. or Notes can't only be sold to those with a license.. Servicers I don't think have MLO or NMLS licenses I think they have servicer type license's.. 

Anyway impossible to regulate there are millions of notes sold each month to hundreds of thousands individuals.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs:

@Mike Hartzog  

@Bob Malecki  

And it excluded Owner occ   as in the notes must be non owner occ for no license requirement

If the loan is on a primary residential property the lender/buyer/owner of the loan,

 excluding the above exceptions

must have a Georgia Lender License.

The way the law is reading it is excluding the exceptions....a double negative, if you will...

"..is not in the business of .... purchasing... mortgage loans does not require licensing."

If I look at it from the Real Estate License perspective, you can buy and sell property as an individual but you need a license to provide services to others.

I understand there's a grey area when they include "purchasing" and my best advise would be to consult an attorney.

I contacted an attorney in Atlanta, and he pointed to exemptions 15 and 16 in the law, which provide exemptions if one is doing this strictly as an "investment" and not as a "business." The not-clearly-defined area is what constitutes an investment activity vs. a business activity. For that, he looked to exemptions 16, which talks about five or fewer times in a calendar year. 


After my discussion with him, I'm moving forward with Georgia notes. Regarding servicing, I always use one. They're the professionals at following the changing rules and regulations.