Note Investor Licensing

[Chris Seveney]

I read many posts about note investors being required to be licensed in many states. I have posted on this as well as states such as GA, OH, KY etc require a license. What I found interesting is I did a search of every investor I have bought loans from (many larger funds including one who is over $150M) and some other investors and what I found was somewhat shocking - Not one, that is right not one of them has a license in any of these states.  

Which begs the question, are many small and think they can fly below the radar? What are the risks involved if caught without a license? 

Is the requirement for a license overblown and a scare tactic some use? Curious to get opinions.

[Don Konipol]

@Chris Seveney

We need to distinguish between originating a note, financing a note, holding the note, servicing a note and brokering a note. These acts may or may not be covered by state laws concerning mortgage notes and lending.

Further, we need to distinguish between commercial and residential, and owner occupied and non owner occupied residential.

Many states have exceptions for any, some, or all of these activities for entities that may do one, two, or even three transactions annually.

I know of no states that require a license for holders of commercial mortgage notes, thou 11 states do require a license for originators or brokers of commercial mortgage notes.