Hard Money Legal Issues

[Cliff Pelfrey]

Does A private individual doing private mortgages for profit on OO primary residents at 16 percent interest throughout the United States need to be licensed? As a private Lender do you have to provide a GFE, Truth in lending and other discourse? Is there a limit how much you can charge in points or total closing cost? Is it legal to require the borrower to sign a deed in lieu of foreclosure at the closing so if there is a default does not have to go through foreclosure just file the deed? Thanks for the input.

[Jerry W.]

@Cliff Pelfrey , I am going to disagree somewhat with most posts on this thread. The answers to your original questions are maybe, maybe, yes, and yes. These answers may vary based upon what state you are in. @Bill Gulley probably has forgotten more than I know about federal lending law but is the actual individual facts of what occurred will probably control. First in many states you can loan money and put a deed in escrow or even hold it yourself. I have litigated that scenario several times in Wyoming, it is called a contract for deed here but is is done primarily on owners selling real estate. That is considered a contract issue, when you truly have a mortgage and try to dress it up in contract law it usually ends up being interpreted under real estate law. You actually do not have enough facts to decide most of your questions accurately. I can say this, attorneys have pretty strict ethics in EVERY state. If they are doing something legal but unethical it can bite them, and pretty hard. Charging $900 for reviewing a title insurance policy on a 30K property and doing dozens may be a problem. Charging $900 for reviewing a one million dollar deal is cheap.

Keep in mind every fact you knew and agreed to when you signed is probably your own problem. You cannot generally enter willingly into a contract knowing the details and then ask the court for an equitable remedy unless it is a contract of adhesion or shocks the conscience. With all of this being said the facts could support exactly what Bill said above, but there is not enough for me to make a final statement. See an attorney, one who deals with financing and give him ALL of the info and get an exact evaluation based upon the state you did the deal in.