Private lender advertising

[Jacob G.]

Is a private lender who is using his own funds to fund loans, allowed to advertise himself to the publice - only doing commercial loans? Anybody have insight on this?

[Don Konipol]

@Jacob G.

There is no national law, rule or regulation prohibiting private commercial mortgage lenders from advertising the availability or offers of their financing. Different states may have state laws, rules or regulations related to such. 11 states require commercial lenders to be licensed, 9 with a commercial mortgage brokers license, 2 (NY and Cal) with a real estate brokers license. However, these states may have exceptions for doing fewer than a stated number of loans within a 12 month period of time. Also, it would seem logical that If a state requires licensure then they would require same for advertising those services requiring licensure.

A lender would not be violating any state law in a state requiring commercial brokerage licensing were he brought the transaction by a licensed mortgage broker. The act of lending money is usually separated from the act of brokering the lending of money, and further refined by the collateral being used as security for the loan. So that even in the 11 states requiring licensure, unlicensed lenders can legally lend under exceptions. Using Arizona as an example, if you are a commercial mortgage lender in AZ doing more than 3 loan in AZ per year, you can either do the loans through a licensed broker or obtain a AZ commercial mortgage brokers license yourself. If you are say a nationwide lender who may do just one or two loan in AZ, no license would be required.

Of course, truth in advertising laws, deceptive trade practice regulations, etc. all apply in all advertising.