Private Lending Certification--Seriously?

Question

I spoke with my attorney this afternoon, and he told me that Illinois is about the pass laws that will "crack down" on self directed IRAs and require private lenders to be certified. Has anyone else heard about this?

John Thedford · Answer

@Jay Hinrichs are you sure? If they were worried about people losing money...what about equities? If they intend to pass the law referenced in the OP, I would bet it is just another example of government intrusion into our personal lives. As you know, some states allow private lenders and others don't. I got a call from an angry mortgage broker telling me she intends to turn me in for advertising private loans. I encouraged her to do so after she reads the law...AND the exemption in Florida that states a private individual may lend their OWN funds. That person may not hold themselves out to the public as a mortgage company. My loan ads start out with: I am not a mortgage company. I am not a mortgage broker. I am a private lender. Hopefully, that suffices. If they lock me up, I hope some of my favorite BP members will come visit me:) This is one of many threads on BP about government intervention. If there is truly a problem they can solve, I am all for it. Most of these regs are anti freedom, anti landlord, social engineering geared, and of little true value. Government has failed at almost everything. The Dodd-Frank law, and its detriment to lending, is a perfect example. Certainly people do need some backup, but geez...contracts are made to be read before signing and not after the fact. I recall several years ago when I was in a business that has since been put out of existence, a borrower came in asking how many more payments they needed to make to have the loan paid off. I almost fell out of my chair. They were paying interest only on a consumer loan at 264% APR for almost six months! The new TRID closing document is a good move provided people READ it. The government actually did something GOOD for once!

Jay Hinrichs · Answer

Chris Mason disagree on the smart cookie.... just attend any REIA meeting you have all sorts of folks looking for the unicorn private lender.. and talking folks into lending out of their IRA you have beginners not really knowing what they don't know... and of course maybe east coast were they are attorney driven they can get some advice.. but anyone west coast can just fire up a DT and note record and fund... when I had my HML company in 'Oakland we had a ton of IRA but I was placing the money for them as the RE broker

Rob Hayes · Answer

@Jim Fell I'm going to an event on the 14th hosted by CAREIA, @Christopher Leon and Ben Walhood. They are having a speaker coming in to talk about self-directed IRAs. I will definitely ask about this since it would have a large affect on how investors can use SDIRAs. I'll keep you posted if I learn something.

Carl Fischer · Answer

Jim Fell Federal and state regulations are strangling all lenders and servicers. It's not just IRAs. Even The banks are still having a hard time with it. We will understand the ramifications shortly as individuals are hiring licensed professionals to help in the process. Once it goes to court precedent will be set. Those of us who have to make a living will figure out how and adapt. We come from a long line of survivors. These laws were written to protect consumers against predatory lenders without considering the unintended consequences. State and federal laws need to be understood at this time and rest assured change is coming. Dave Van Horn can shed some light in this area I hope he chimes in.

Jay Hinrichs · Answer

@Gunter Freystaetter that's a huge fish.. is that a tuna ?

John Thedford · Answer

@Jay Hinrichs ..commercial is DF exempt. Residential, if held in an LLC is exempt. Consumer loans are governed by DF and I don't write those. So far, relatively no problems. I am doing these with my SOLO 401K so returns are tax deferred. If you have any deals in SW FL on residential let me know. I need to expand my portfolio. Take care...always glad to see you on the forums.

Jay Hinrichs · Answer

@John Thedford there you go in Oregon and NV and many other states. what you described does not exempt you from NMLS and dodd frank compliance its the property not the purpose. So to that end we as always need to talk state specific so we give semi accurate advice to our brethren on BPI was just in Orlando and Justin STemper took me to this ( him of Zombie house fame) AWESOME oyster bar.. its was the best.. Old time place fall back in time.. man it was cool. liked what I saw in Orlando.. I have been buying and selling there for almost 4 years and it was the first time I came to visit I think I have done well over 150 buy and sells in Orlando and the Sprawling areas around it. and before we get excited I am NOT a LENDER ANYMORE I buy and resell :)

John Thedford · Answer

@Jay Hinrichs I can write as many as I desire. I am DF compliant...I don't write anything that falls under DF. NO consumer loans. Exempt exempt exempt...and I like it that way. Helps avoid more government intrusion:) I only write for entities such as LLC's and they must sign a business purposes statement.

Chris Mason · Answer

I just had an image of Wile E Coyote sitting on a rocket with wheels that had "Acme Deed of Trust" written on it, activate the rocket, and accelerate directly into a stone wall while the Road Runner looked on.

Jay Hinrichs · Answer

@John Thedford most laws are written exactly like that in our state its verbatim of what you said.. although you can only do a certain amount in any one year and only hold a small amount in total.. its that exemption that most private folks run on... if your high volume I suspect that would be an issue.I just advertised for a compliance broker on the market place to do some loans for me in NV.. ( as I know you need NMLS there like ORegon) someone on BP turned me in to the state and or they troll the market place.. I got a letter from NV state finance department wanting to know about my loan activity in NV.... I had to respond with a affidavit that I did not make a loan there never have and never will without a license... so advertsing for loans there would get you shut down pretty quickly.let that person turn you in.. and see what come of it...