All Forum Posts by: Lupe Santiago

Bill Gulley Hi - thanks for your reply and help! I believe CA doesn't distinguish between mortgage brokers and real estate brokers. The RE broker's license covers both worlds.

Not sure what you mean by using notes as collateral - I don't plan on doing such a thing so forgive me if I wasn't clear in my description. I'm using the RE as the collateral for the hard money loans I originate then selling it to investors who want a well-secured, high interest bearing short term note at par value. No premiums or discounts involved. Just good old high interest rates.

I'm not really interested in buying a mortgage company because I don't plan on originating mortgages in the traditional sense (it will be non-owner occupied, to LLCs, business-purpose only). I spoke with CA Dept of RE this morning and they said that the need for a Mortgage Originating License in CA is determined by the use of the loan, and not the underlying collateral. So if I only lend to flippers and non-end users, there shouldn't be a problem in the foreseeable future with having only a broker's license.

Luckily, I have a law degree from a good school and will soon be a member of the CA bar so I should be able to obtain the broker's license fairly quickly. Sorting out all the licensing requirements is a pain though! I know I come off as ignorant to the world of lending, but I am quite familiar with the business of distressed real estate. It's tough to get started, but the community here is certainly a big help in sorting these issues out. Thanks everyone!

Jeff S, Brian Burke, Corey Dutton, David C.

Brian Burke and Jeff S - WOW! Thank you both for the great advice. Your responses were so thorough and helpful. I will take this information to heart and proceed accordingly. Brian - the thought of S Corps for DRE Brokerage licenses completely escaped my consideration - thanks for this. And Jeff - great and very clear examples. This helps so much for my understanding. I really appreciate the time everyone took to help a novice get started! Best of luck with your businesses and see you around on the forums.

Jeff S Lupe's Lending is a strong contender for a business name. Look for it in the future!

Anyway, I'm still confused as to why the recommendation of a Broker's license over a CA Finance Lender's License. Does a CFLL not allow you to originate loans for business purpose, secured by real property, at rates greater than 10%? What advantage does getting a broker's license afford you over a CFLL?

The reason why I struggle with this issue is because I want the protection of an LLC (my research indicates that an LLC could obtain a CFL License - please correct me if I'm wrong), yet need to make sure that the license allows me to do what I want to do. The DRE broker's license only applies to individuals and corporations and double taxation is simply out of the question for me. You said that a CFLL would prohibit me from doing some things that a DRE Broker's license would allow me to do. I'm having a hard time finding the answers.

Would I be able to sell my originated loans to the market as a CFLL? Or is that where I need the broker's license?

THANKS AGAIN FOR YOUR HELP!!! It's much appreciated.

Brian Burke Jeff S Thank you both for your replies! This is very helpful information. A little more detail on what it is that I plan on doing. I wish to establish an entity to limit my liability as a lender. I cannot do this as an LLC? I have assets under my name that I would like to protect, but two layers of taxation as a corporation simply will not work for me.

As for the business: I plan on using my own capital to originate. I have a fairly healthy amount to work with and will NOT need to use other lenders' money to make the loan. However, I do plan on making loans secured by real property that exceed 10% APR for a period not to exceed 12 months. I will be selling to flippers for business / investment purpose only. Nothing I do will be owner occupied. However, I can imagine a situation that a flipper/rehabber would not be operating under an LLC or other business entity, but rather his own name. Will providing some sort of business-purpose only addendum to the loan agreement substantiate this? I myself plan on getting my broker's license. It seems that the only choice is either a corporation or my individual name. I read that there's an advantage of getting an CA Finance Lender License because it would apply to a business entity as a whole rather than individual licensees. If I obtained a CFLL for my company, would it preclude me from being required to have the broker's license to fall out of usury for my loans exceeding 10% APR? Would I still need to get my broker's license regardless? I see a lot of companies have DRE - Corporation licenses. I need to check if an LLC could obtain a CFLL.

Furthermore, I plan to SELL the loans to the open market once I originate them. Does this add a level of complexity to the licensing regime?

Thanks again for the advice - I know I should consult a lending attorney but this is a great start for me. I appreciate the time and help. It's a bit overwhelming to consider all of this right now.

Bill Gulley Thanks for your response! Would originating hard money loans to non-owner occupied residential real estate be exempt from the SAFE act and NMLS registration in California? I've been trying to research this question and have found conflicting answers. If I'm a lender of this type and exempt from the SAFE Act, would I just require a CA Finance Lender's license? Finding the answer to these questions has been tough... I haven't been able to reach the CA Dept. of RE all day.

Hello,

If I originate a loan (hard money residential - not for owner occupied dwellings) and then sell the loans to the open market, do I need a separate license? Am I a broker if I'm selling my own loans that I originate?

Thanks and best regards,
L.S.

@Corey Dutton Thanks for your reply, Corey! Would licensing under the SAFE Act / NMLS system preclude me from having to get a California Finance Lender's License? I'm planning to do this only for residential properties, but may venture into commercial hard money lending if the opportunity is appropriate.

Thanks,
L.S.

Hello,

I'm doing some research into starting a hard money lending business in California. The loans would be first trust deeds on non-owner occupied residential property (lending to RE investors) and the business entity would be an LLC. Which licenses would I need to do this? My research leads me to believe it's a California Finance Lender's license and a Dept. of Real Estate Corporations License. Does this kind of business run afoul of the SAFE Act? Would I need to be registered with the NLMS? Again, this is NOT owner-occupied residential loans.

Best Regards and thank you for the responses.