Do I need a mortgage license to purchase notes?

Question

I am looking to start purchasing several real estate secured notes. I am not using other people's funds, all my own. I am seeing if I can purchase all the notes I want without a NMLS license as long as I don't originate new notes or act as a middle man / broker for the notes.

Thanks for the help!

Robert Bowles · Answer

There is a lot of confusion with this. I am meeting with someone with OR Dep of Finance and Corp Securities next week and a RE attorney to make sure to get this right. There are circumstances where someone can invest in notes without a license but they seem to be written so that you can finance a property you own or invest in a few (less than 3 (a question I need answered)) with your own funds. If you are in the business of making or investing in RE notes you would need a license...but when are you "in the business"? Below is part of the list who does not need a license. A person who makes a loan secured by an interest in real estate with the person’s own moneys, for the person’s own investment and who is not engaged in the business of making loans secured by an interest in real estate. I hope to have a definitive answer soon and well shoot what I find your way.

Jay Hinrichs · Answer

Account Closed @Robert Bowles Robert would be interested in your meetings we went round and round with DFC on our investment model ( our attorney told us we did not need a offering memorandum state said we did) we paid a small fine and created the document... Our attorney has told us that if your just a principal buying an existing Note for your personal portfolio Like off of Note exchange website or something like that.. that no license is required.. However if you are taking compensation selling notes to an Oregonian or doing business in Oregon then you need the NMLS license ( that goes for notes in any part of the country and regardless if they are quote un quote for commercial purposes) For our note business we are headquartered across the river in Vancouver and the State of WA is like many states loans that are for business purpose's are exempt from the NMLS license requirements. WE do NO business with Oregon Notes or Oregon Investors. Now I am not up to speed on the servicing requirements although I did make an offer to buy a portfolio of notes and the selling servicer would not sell them unless we were a licensed servicer.. So there is that aspect one needs to look at.. As that probably relates to Owner occ as well. but not really versed on this aspect. Stewart the note business has treated me well for many many years.. And is a great alternative for steady returns as opposed to trying to own and run rentals. But its not without its pit falls.. I have been buying notes for my IRA since the late 70S when self directed IRA's became available to self employed and I was one of Entrusts first 500 clients when they started in their little office right off of Lake Merced in Oakland

Doug Smith · Answer

Normally, the answer is no. I am unfamiliar with Oregon law as we do not do business in that state, but in states such as GA you do need a license (for owner occupied consumer loans...not non-owner occupied or commercial). In most states, you do not. Bottom line: each state is different. You'll need to research each one before you buy in that state. You will need to have a servicer do the lion's share of the collection work for you, however. New regulations make it so, in most cases, you can't collect without a specific license. For instance, NC is that way. If I may offer advice, find a partner that really knows what they are doing (soapbox moment: Many on here say to find a note broker or mortgage broker...I have found most haven't a clue about what they are doing in this arena). I only know a couple of the "Gurus" that will put you through a 2 day course and mentor you for several thousand dollars. I was invited to sit through a course when one was in my town to see how they could partner with my company and came away feeling as if he was only leading lambs to slaughter (no, I will not insult the person by listing his name on here). The loan business is a different animal from real estate with tons of pitfalls. I'm still learning every day after many, many years. I hope this helps you. Good luck.