All Forum Posts by: Lupe Santiago

@Jonathan W. Thanks! This appears to be a service that I'm looking for. Do you have any experience using it?

@Account Closed Great, thanks for checking up on it :)

Hi,

I'm a licensed broker in CA with private money to lend. What I am looking for is a website or exchange where mortgage brokers or individual borrowers post their needs / borrowing requirements and lenders can submit bids to fund the loan. I recently found lendinguniverse.com, but I just registered for an account and am waiting to be approved. I'm looking for a system like an MLS, but for real property loans instead of homes. Anybody know of any place like this?

Thanks!!

Thanks, as always. Bill :D

Bill Gulley, I still don't see the problematic issue here. Not trying to argue, but I don't think I 'get it.'

Original scenario: Buyer will buy for $85k, bank will give conventional if buyer puts 25% down. Bank carries 64k. Seller gets $85k - closing costs. Problem: Buyer doesn't have the 21k+closing costs and the deal falls apart.

Seller financing scenario: Buyer negotiates seller financing with seller. Buyer will pay $93k, get same loan from bank, and ask seller to carry back $16k with some fair interest rate higher than whatever the bank will give on the 1st position loan since it's riskier. Seller receives $77k - closing costs up front, and will be paid additional $16k + interest over the term of the loan. It seems like a reasonable risk/reward, no?

I'm not sure what you're talking about with zero interest rates, note amount higher than ltv, etc... Interest rate would have to be higher than 1st position, the notes would be 64k + $16k and just say that $85k is the market value. Yeah, it's higher LTV, but isn't that the point of seller taking a second? Buyer doesn't have enough money to make the down payment without the 2nd loan. To my knowledge, most states' adopt a version of the SAFE Act that has a carve out for seller financing, unless you go above a certain amount of transactions.

Dion DePaoli, GREAT post! That was really clear. I was not aware of the additional regulations of a bridge loan, as indeed my loan will be for less than 18 months. I'll have to look into this - the main concern is if there are any limitations to due on sale because that's when I would be paid off. Although, it doesn't make sense that the borrower wouldn't pay it off at the time it's flipped to a home buyer because home buyer wouldn't be able to receive it free and clear. Nonetheless, it's good to be aware of other arms of regulation. Thanks!

Dion DePaoli, thanks for your response. I too saw that website differentiating the RML, FLL, and Broker's license, but I was confused about the absence of the table funding language in the broker's section. Why did the author specifically indicate that the lender's license could not table fund, but it wasn't mentioned in the broker's column. Does that mean it's permissible in some instances?

Even as a Finance Lender, it may be permissible to table-fund according to this guidance by the NMLS as long as it's not to institutional investors. However, I'm more concerned with the question as it applies to brokers.

"For purposes of Financial Code Sections 22340 and 22600, when selling loans secured by real property
to institutional investors, the applicant agrees that the source of funds will be exclusive of any funding advances from an institutional investor committed to purchasing the note. The practice commonly
known as “table funding” is not permitted under the California Finance Lenders Law."

Check out this link. http://mortgage.nationwidelicensingsystem.org/slr/StateForms/CA-DOC7-CFLL-Execution-Seciton-.pdf

Thanks!!

Bill Gulley, please explain what you think the predatory aspect is.

If you can make it work with your investment plan, offer the seller a higher bid. If the property is $85k and the bank will finance you 75%, then that's a loan of about $64k. If you don't have $21k + closing costs, let's call it $24k, and can only put down $16k, as the seller to take back a 2nd, ask the seller to carry that $8k shortage + an extra $8k to be added to the purchase price.

So you'll buy the property for $93k, get financed by 1st mortgage for $64k, have seller carry $16k at some reasonable rate for, i don't know, 3-5 years, and you put down $13k + closing costs.

You get the idea. A lot of times banks don't like a subordinate mortgage because it increases the risk of defaulting on the first mortgage due to cash flow issues. It helps if your market is on the rise because it will naturally inflate your equity and you will be less likely to walk away from it easily. Still, 16k down on a $93k purchase isn't terrible.

Bottom line - seller financed properties usually go for a little bit more because the seller defers his chance to be fully cashed out at the market value of his property.

Hi,

There is an individual I know that is trying to get me to fund a note that he is brokering. He structures the transaction so that the Borrower executes the Promissory Note and Deed of Trust in favor of the individual, then simultaneously I fund the escrow and individual assigns the Note / DoT to me. I am operating as a sole proprietor / individual investor.

Is this legal in CA? I've read various discussions that it's illegal to do this in CA. Does it matter whether the true lender (me) is an institutional investor or not? I can't find the applicable statutes within the CA Dept of Real Estate's statutes.

Does a broker's license allow him to structure this kind of transaction?

Please take a look at this article explaining how table funding is illegal in CA effective January 1, 1999. I've also read other forums where people say that it IS in fact illegal, but like all discussion on the internet, details are absent as are citations to actual law.

http://realtytimes.com/rtpages/19981008_tablefunding.htm

Thanks!

You're right Steve, I mixed up the names. Good catch!