1st position note on CA home with balloon??

[Bob Malecki]

Hi Folks,

I'm looking a buying a first position note for $150k UPB on a home with an apparent value of >$300K located in So. Cal. via the FCIxchange site. Its listed as "newly originated". I looked at the note and DOT and it was generated with a LLC as the lender and a different LLC as the borrower, both located in CA. the note is for 12.95% interest payable as interest only with a balloon in 2016. There is also an exclusion for the requirement for the borrower to occupy the home. Both the note and DOT was originated on Feb. 3, 2014.

So, this bit of detective work makes me wonder if this note is compliant with Dodd Frank since it has a balloon, although the borrower occupancy is waived and there is an Assignment of Rents rider on the DOT. Any thoughts on this?

The seller says the property is vacant, so I'm thinking either it will be used as a rental or cannabis grow house. Any other thoughts on how this is executed?