What would happen and possible consequences if I just pulled the trigger?

[Carlo D.]

I previously posted questions on this channel about lending money on the paperstac platform. Decided getting the licenses to be a lender in different states wasn't worth it. 

However, my question is, what would/could happen if I just went ahead and did one small deal? Will it go through? Will any of the parties to the transaction inquire if I have the licenses to conduct this business?  If the lender defaults, will the fact that I purchased the loan as an individual with no licenses compromise my capability to collect/foreclose? 

Thank you in advance.

[John Neufer]

Hi Carlo, 

I have been originating private money and commercial notes for close to 10 years. 

My understanding is that you don't need a license to buy any paper (notes). 

You only need a license to originate paper if the loan falls under the TILA RESPA guidelines. Basically, if you are lending on someone primary residence is when things get sticky with disclosure laws, timelines, terms, etc. 

The easiest way to avoid the licensing issues is to simply lend money, or buy paper on investment properties. 90% of the states do not require a license to originate, lend, or buy and sell paper if the subject property is Non Owner Occupied, ie: Business Purpose Real Estate, ie Investment Property. 

That is what all the hard money lenders do, and it allows them to lend nationwide without getting tagged for licensing issues. 

States that do require a license to lend/broker on 1-4 Resi Investment Properties: 

CA, ID, OR, NV, AZ, UT

States that do require a license to lend/broker on 5+ Multi/Mixed Use or Commercial properties:

CA, ID, OR, NV, AZ

**not legal advice - do your own research.