Private Lending in Florida - Rules & Regs

[Lupe Santiago]

Hi! I have the opportunity to make some loans to a home flipping business in FL (structured as an LLC) secured by first position mortgages on residential real estate. I've looked through the laws myself ( http://law.onecle.com/florida/regulation-of-trade-commerce-investments-and-solicitations/chapter494.html ) and want to share what I have found about exemptions for individuals lending private money secured by mortgages on residential property. I am not asking for legal advice, just opinions and peoples' experience with private lending in FL. I am not a broker or any kind of licensed real estate professional - just an individual looking to park my money in some investments. I would be directly lending to the company and taking points + interest (all within usury limits).

Anyway, here goes with what I've found:

• Mortgage Lender: “A person Making a Mortgage Loan or Servicing a Mortgage Loan for others, or, for compensation or gain, directly or indirectly, selling or offering to sell a Mortgage Loan to a Non-Institutional Investor.

• Mortgage Loan: Any:
• Residential Loan primarily for personal, family, or household use which is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a Dwelling, as defined in s. 103(v) of the federal Truth in Lending Act (TILA), OR for the purchase of residential real estate upon which a dwelling is to be constructed (raw land);
• Dwelling (TILA): “a residential structure or mobile home which contains one to four family housing units, or individual units of condominiums or cooperatives.”

• Making a Mortgage Loan: “Closing a Mortgage Loan in a PERSONAL NAME, advancing funds, offering to advance funds, or making a commitment to advance funds to an applicant for a Mortgage Loan.”

• Exemption: “The following are exempt from regulation under this part (Part I – ‘General Provisions’) and Parts II and III ( II – Mortgage Brokers, III – Mortgage Lenders )
• (2) The following persons ARE exempt from regulation under Part III (Mortgage Lenders) of this chapter:
• (e) An individual Making or Acquiring a Mortgage Loan using his or her OWN FUNDS for his or her OWN INVESTMENT, AND who does NOT hold himself or herself out to the public as being in the mortgage lending business.
• (f) An individual selling a mortgage that was made or purchased with that individual’s funds for his or her own investment, AND who does NOT hold himself or herself out to the public as being in the mortgage lending business.

So my thoughts are that it looks like I can make the loan to the company and charges points in addition to interest. Not only that, it appears that I can sell the note. Am I missing something here, or is FL pretty loose with the laws? I know there's always the great debate about intended use of the loan (business purpose, non-owner occupied) vs. the nature of the asset underlying the loan (residential whether owner-occupied or not vs. commercial). To me, FL makes it look clear that private unlicensed lending on non-owner occupied residential real estate is OK.

Thoughts? Am I missing something here? Other regulations or rules to be concerned about before pulling the trigger on this? Also, what are the boundaries of "holding oneself out to the public as being in the mortgage lending business" ?? Wow, long post - thanks for taking the time to read :)