All Forum Posts by: Eric Guasch

Thanks for feedback, Jay. I anticipate complying with all licensing requirements - so not looking to cut any corners.

Also, thank you, Dion. Very informative response.

Thank you, John.

Jeff, wasn't sure if I would be able to quantify my lien position on any of the loans issued as an asset or not. Thank you, though

Thanks for reaching out, John. 

I interpret the language as somewhat vague, but here is what it states:

494.00721 Net worth.—

(1) The net worth requirements in s. 494.00611 shall be continually maintained as a condition of licensure.

(2) If a mortgage lender fails to satisfy the net worth requirements, the mortgage lender shall immediately cease taking any new mortgage loan applications. Thereafter, the mortgage lender shall have up to 60 days within which to satisfy the net worth requirements. If the licensee makes the office aware, prior to an examination, that the licensee no longer meets the net worth requirements, the mortgage lender shall have 120 days within which to satisfy the net worth requirements. A mortgage lender may not resume acting as a mortgage lender without written authorization from the office, which authorization shall be granted if the mortgage lender provides the office with documentation which satisfies the requirements of s. 494.00611, whichever is applicable.

(3) If the mortgage lender does not satisfy the net worth requirements within 120 days, the license of the mortgage lender shall be deemed to be relinquished and canceled and all servicing contracts shall be disposed of in a timely manner by the mortgage lender.

Hello All-

I am interested in applying for the Florida Mortgage Servicer License. According to statute 494.00721, the company must maintain a net worth requirement of $250k in order to originate and service the debt on the back-end. 

In order to justify the net worth of the company, do I need to have $250k parked in a non-interest bearing bank account year round, or if I have over $250k lent out, would that justify the financial standing of the company?

Any insight or direction would be greatly appreciated.

Thanks in advance

Thanks for the reply, Wayne. 

By break-even, I was referring to the amount of revenue we would generate off originating and selling the loans versus originating and holding the loans in our portfolio through maturity. 

Ex: For easy computation - Originating 1M of loans at 11% APR + 3 points at origination = 140k of revenue

Versus 

Ex: Originating roughly 4.6M and selling the loans in the secondary market, keeping origination = About 138k in revenue (before servicing fees)

From what I understand, if we were to originate and sell the loans off, we would be entitled to the origination fee and possibly another .5pt to a 1pt for servicing the loan. Please correct me if I am under the wrong impression.

Appreciate the insight.

@Wayne Brooks

@Evan Demchick Thanks for the feedback, Evan.

We're looking to qualify each individual loan as a play (post proper diligence on the subject property) - then charging a local industry HML rate versus assessing the risk of the transaction and possibly charging a higher interest rate. Against this backdrop, we feel that this would help us focus on quality borrowers further mitigating risk on our end. Of course, the riskier the development/flip the more we are entitled to as a return - but considering we are new to this angle of investment, we want to play on the conservative end of the spectrum at inception.

Any experience with trading these loans in the secondary market? We are having a little dilemma in the sense that we haven't decided if we want to cap our fund out and hold loans through maturity - or try and originate as many loans as possible, then subsequently sell them off. Our current avenue of referrals claims that he can originate our initial investment in 2-3 months - but from what I understand, it would take originating roughly 5x are initial investment to break the even mark if we were to originate and hold the loans through maturity. At first, it would be a challenge to break the even mark - but looking forward it may be beneficial to us considering the amount of capital we could possibly have backing us.

Again, thanks for your time - it is much appreciated.

Hello All,

I have recently been presented the opportunity to invest some family capital in HML in the South Florida area. At inception, we have decided to angle our business specific to home flippers (non-owner occupied). All loans would be first positioned mortgages secured by the property as collateral. The current arrangement is that a family member would hold the lending license under an LLC. while we simultaneously lend the money - through another LLC. - to prospective borrowers (please disclose if there is a better way of structuring this).

1- We have been told that 10.75% APR and 2.5 points is a competitive rate - in the current market, would it be feasible to exceed those returns at 60% LTV/6-18 months maturity?

2- I understand this is a very subjective question - but considering the current market situation, would it be in our best interest to issue more lesser-valued loans to diversify portfolio - or should we focus on getting out less higher-valued loans. If the latter, considering usury laws, can lenders get away with charging higher APR's on loans exceeding 500k in the current market. Generally speaking, I understand lending higher amounts typically would attract "better" borrowers, in turn further mitigating risk which should imply lower APR's, just curious?

3- Considering the above, what regulations should be our main concern going in to this?

My apologies for the general questions, we are in the early stages of this  - and we are looking to get as much insight prior to approaching a consultant and an attorney. Any direction would be greatly appreciated considering our current lack of knowledge of the lending industry... Thanks in advance and look forward to your feedback!