I found out something very interesting today from the North Carolina Banking Commission Attorney.
I have been involved with numerous transactions involving lending over the years. Several have involved transactions in which private financing has been involved and I am sure no one knew this lending law.
It is illegal for an individual to loan funds to another(more than 5 transactions a year) to purchase a primary residence and hold a deed of trust, unless they have a mortgage license. However commerical and investment properties are not included. Land,if the intent to build a primary residence on it,is included.
Under this lending law a family member can not loan funds and hold a deed of trust for another family member,it's illegal.
We have several private investor loans in our area and I am sure in most areas. What about privately financed seconds?
My concern is that with the mortgage crisis and the way it has affected many lenders the private investor may be used more, and in many transactions, may be illegal.
Attorneys draw up the documents and if they do not know private investors need a mortgage license,then how should the individual who has no lending knowledge.
If anyone has any additional information on this please let me know ?
I may have a lender who, with the private investors cooperation,can make these transactions legal and hopefully will have this info soon. If anyone is interested please contact me.
Cindy Ledbetter
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Cindy, it makses sense for them to need a Mortgage license, if only for the purpose that licensing law may protect innocent borrowers from unscrupulous lenders who are held accountable to that law. I wonder what the specifc law is here is Washington? (Probably something very similar!) And lots of people do it, don't they?
I'm thinking specifically of community trusts, where extended family or cultural groups pool their money and then help each other out with loans, whether its business or residential. That's existed for generations, I can't imagine any law could change that...