Private Mortgage Lending to Owner Occupiers

3 Replies

Is it prudent for a private investor to lend mortgage funds to an owner occupied borrower?

You need to vet them as any major bank would using fanny freddie guidelines as per Dodd/Frank act. I believe you also need a separate servicing company to service the loan. You may want to tell them to take possession in the name of an LLC and not O/O but as an investor. Investors are not subject to the same guidelines.

It depends on your strategy.  Keep in mind that a consumer loan, i.e., a loan to an individual who intends to occupy the property, is subject to government regulation (Dodd-Frank in particular).  You will need to use a mortgage loan originator (RMLO) who is licensed in the state, and there is significant cost related to this.  The alternative is to do commercial loans to business entities for construction and rehab.  These are short term loans which generally carry a higher interest rates + points.  An RMLO is not required in this case and you can develop repeat business with your borrowers.  If you are looking to park some capital in a long term loan, it is best IMO to buy an existing loan rather than originate yourself.

You are asking if you can be a "Lender" to a primary residence.  Many things are not clear such as whether you have an ownership in the property.  (read as "No")  Additionally which state the Subject Property is located in.  (read as "Florida"?)

You will be required to either own the property or be a licensed mortgage lender with the state of Florida if the above is read correctly.  Simply using an RMLO will not mitigate that requirement for you.  Florida and many other states have separate licenses for the agents (brokers) and the company (Mortgage Broker Business, or Mortgage Lender).  The company license dictates the role of the business.  If you are not a licensed lender, where a state requires a license to lend, you may not lend at all to primary consumers.  

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