Some Hard Money Lenders Forced to Comply With Licensing Reqs

[Corey Dutton]

Some hard money lenders and brokers may have to comply with new licensing requirements for lending on residential property. Depending on what State you are working in, if you are lending your own money on residential property, you may be required to be licensed. As a hard money broker on these transactions, the same may apply. But how and why?

Under the Consumer Financial Protection Bureau set up under Dodd Frank, those conducting the business of residential mortgage loans may be under new obligations to become licensed. For example, in the State of Nevada, if you are a hard money lender, even if you are lending your own money on residential property 1 to 4 units, you must be licensed under the SAFE Act under the Division of Mortgage Lending in Nevada. And if you are a hard money broker on such transactions, you must also be licensed.

But again, each State has taken a different line in response to this. If you are hard money lender or a hard money broker and you are unsure, contact the Division of Mortgage Lending and/or the Division of Real Estate at your State level to inquire. Tell them what business activities you are engaging in, and inquire about licensing requirements. You may be shocked to find out that you may need a license.