All Forum Posts by: Brittany P.

Thanks, Chris. Makes perfect sense.

Another question for you pros: we currently manage a small portfolio of CFDs on land parcels and a couple of private loans. We service everything ourselves (because we're cheap right now--please don't judge us too harshly). Is there an issue with getting set up with one or more of the credit bureaus and starting to report on our borrowers? Is anyone aware of legal issues with this? Especially considering that the seller we bought the CFDs from did not report on the borrowers. Are there restrictions on credit reporting for CFDs versus mortgages/DOTs. If there aren't issues with this and it wouldn't be too much extra work, I'm really just looking for an additional tool to incentivize our borrowers/purchasers to keep paying timely each month. Hoping the experts can chime in here--thanks, all!

Are you saying the debt can be wiped out if you aren’t sending statements?

Thanks, Chris—super helpful!

Thanks! Do the rest of those states allow non-licensed lending on owner-occupied? Or maybe an easier way to ask: are there states that allow non-licensed lending on owner-occupied/primary residences?

Quote from @Beth Johnson:

I rarely, if ever, go behind HML for the reasons stated by others. There is too punitive measures and shorter time horizon for that loan to mature and eat away at your equity buffer. In WA state, we are deed of trust state and non-judicial (with an option for judicial) and requires a Notice of Default (30-day cure period) and a 120-day Notice of Trustee Sale with cure period. I'm extremely careful about how we originate 2nds and it's not for novice lenders and it certainly is not something I would buy - even at a steep discount. Yes, I've had to foreclose on a few in 2nd and it wasn't a problem because I was behind a conventional mortgage lender who could not act as fast as we could. But plenty could have gone wrong if it were not managed tightly - both during origination and while the loan was in service. There are some states like TX where the foreclosure process is so efficient, you could lose your equity position within 30-days of the borrower defaulting on the first. So, that's a state where we would be super cautious about lending in second position.

And to @Jay Hinrichs's point, I see no safeguards for gators when teaching about gap funding, EMD funding, or any other tactic that they try and sell which tells you to get 0% interest credit cards and build business credit to be used to lend out. No thank you. I'll pass.

Very rookie question for you, @Patrick Roberts and everyone else here: I thought that post-Dodd-Frank, the barrier for mortgage lender accreditation/licensing was essentially raised to a point that HML’s and private lenders were effectively iced out of securing loans with a mortgage or DOT. I guess I had (naively?) assumed that hard/private money loans were either unsecured or collateralized against non-real estate. Is that not the case? Is it possible to get licensed as a hard/private lender and secure loans with a mortgage/DOT? Do hard/private lenders have to get licensed by NMLS? I thought this day and age all lenders had to be individually licensed and working for a brokerage…?

I figured I’ll get to that point eventually, once my portfolio hopefully grows a little larger. It’s just that for performing CFDs they’re so easy to self-service, at least for now.

@Chris Seveney

You had me laughing. I've had a "guru" tell me there's no need to send a 1098 under a certain dollar amount for a CFD. Now I just send the 1098 when the contract is paid in full so that the buyer can claim the full interest the year they pay off. Hope that's kosher…

Super helpful (even if it’s ChatGPT). Just wanted to make sure I’m not crazy thinking even vacant land might have to go through foreclosure auction.

Interesting. I assume that land sellers even in states like FL and GA still use CFD/land installment contracts. There must be a reason they're using CFD as opposed to DOT or mortgage and transferring deed to the buyer at closing. Maybe it's because CFD can be done without a title or escrow agent? Although if I were the buyer I'd still want a title/escrow agent if I'm investing in real estate...

So if you're right, I'm wondering what the advantage of CFD is. Even if you don't have to fight to get the deed back, you'd still be stuck with the contract until the foreclosure process is complete. Meaning you can't just turn around and get the parcel under a new contract...