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Updated almost 8 years ago on . Most recent reply presented by

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Don Spafford
  • Investor
  • Idaho Falls, ID
626
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909
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Be a lender/intermediary for buyers without a SS#?

Don Spafford
  • Investor
  • Idaho Falls, ID
Posted

So I had this idea today and I want to get some thoughts and legal advice on how it would work if possible. My wife is a Realtor who speaks Spanish. She gets a lot of buyers who have large sums of money for a down payment but don't have a SS#, they are legal residents but without a SS# can't get a loan from a bank. There is one local credit union that will but they're not easy to work with. So I see a need and would like to help fill that need. My thought is to essentially be the bank for these people. But since I don't have millions to lend out, my thought is to buy the property they want in the name of my company, using their money for the down payment, and then essentially immediately sell it to them in a lease option.

The only real issue I see is still going through the bank. I know they won't want to accept their money as my money since I can't use borrowed funds for the down payment. I am hopeful that if I can do it in the business name, I can take the down payment from the buyer and incorporate it in the business income to then deploy to buy the house for them. No intention to rip off anybody, just trying to help a large group of people that are hard working and want to buy a house. My wife gets the commissions, then we get a small percentage over the minimum mortgage payment. it would be spelled out in a contract that they can pay it off at any time but if they don't make the payment or get behind, they can be foreclosed on just like the bank would or they would be in breach of the contract and charge some extra fee if it is late or whatever.

This would obviously set my wife apart as THE Realtor to go to for people in that situation which would I expect increase her business tremendously and therefore at some point we could really be the ones buying the properties with our own money to do this.

Any thoughts to any legal, SEC, fair housing, or any other laws/regulations that would make this a bad idea or make it not even possible? The other thought besides using the bank would of course to find people with really BIG pockets to help fund these situations and truly be the bank. They would get the down payment and could foreclose at any time.

I appreciate any thoughts, input, or advice here.

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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
6,264
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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
Replied

Don, you will not get a legal advice on the forum, for that you need to hire an attorney. But there are many experienced investors here who do creating financing, deal structuring, etc. so you will probably hear some ideas. 

One possible solution that comes to mind is to use private financing to help those folks buy those properties. I know one broker who probably can help you. They (those buyers) will not get the same terms as they would from the bank, but since they are unable to get bank's financing those terms will be pretty decent. The broker funding those loans with private money of many individual investors who are using their savings as well as self-directed IRAs. Their rates start at 6.5%, they will finance up to 60% LTV and don't require US citizenship. PM me if you wish to explore this option and I will connect you. While this option may not be as profitable as what you proposed it will be cleaner and if this works your wife can help more people so the benefit will be in the volume.

  • Dmitriy Fomichenko
  • (949) 228-9393
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Sense Financial Services LLC
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