Scranton, PA · Member since 2016 · 201 posts · 44 votes
I do tax sales in PA. Judicial sales. Doubling my money. It's fun.
Going to start hard money lending to people facing tax sale. Win/win as I see it .... win if they pay me off and I get my interest, win (since I do my diligence) if they don't and I get the home.
I am putting together people with lazy money to go after the deals...always a good return
my question is I hear the term 'predatory lending' . If I am clear with people on what we're doing (plain language, simple numbers) is this enough to be non predatory?
There are regulations for hard money lenders in every state and I'm all but sure you would need to get a license. That being said, predatory lending is usually either 1) lending at exorbitant rates, i.e. usury or 2) lending with the intent for the borrower to default so the lender can claim the collateral. Of course you will need the proper disclosures and what not, but a lot has to do with what you are charging. You should definitely talk to an attorney, but the general hard money lender loaning at 11-15% and 3-5 points shouldn't qualify as predatory.
thank you. Our attorney indicates we don't need any licensing, since our lending is direct....individuals lending directly to individuals
we're not doing it as a company, as a company, we simply find the deals, and we put the two flowers together. But we charge a service fee for this we don't get involved in the lending itself
for instance Harold will lend rafael money, or Guy will lend from his 401 K or Billy Bob's individual company is lending directly to the borrower.
But I appreciate the rest of the information that's very helpful thank you
thank you. Our attorney indicates we don't need any licensing, since our lending is direct....individuals lending directly to individuals
we're not doing it as a company, as a company, we simply find the deals, and we put the two flowers together. But we charge a service fee for this we don't get involved in the lending itself
for instance Harold will lend rafael money, or Guy will lend from his 401 K or Billy Bob's individual company is lending directly to the borrower.
But I appreciate the rest of the information that's very helpful thank you
I would check to make sure you are Dodd Frank compliant. If you are extending new credit secured by a home you will likely need to have your loans underwritten by an RMLO to ensure compliance. @Bill Gulley probably has some words about this.
If you're making or arranging loans secured by real estate, sounds like there is an idiot for an attorney if he specializes in financing, but it's something I'd expect to hear from slip and fall type.
Try federal law, mortgage brokering, there is no exception for individual to individual, that does not apply at all in making loans to just any individual. And, the name of your company pretty much says it all, it's not what you define as your business, it's what your business practices are and the implications of lending you hold out to the public and by advertising that you'll make loans or put lenders and borrowers together..
I'd just suggest you cool the heels, find a good attorney who specializes in financial compliance and start over.
You can't introduce two flowers and take any honey, that is brokering loans.
As to consumers, any extension of credit credit to a consumer requires a license, you can find the scoop on the CFPB web site ad in the definitions of the Dodd-Frank Act as amended.
There is a world of difference between most real estate attorneys and financial compliance legal eagles. Good luck:)