I would reckon that even an LLC is somewhat of a head ache from a regulatory perspective - you will need an attorney to draft a PPM, also I believe you will technically become an investment adviser so far as The Investment Advisers Act of 1940 is concerned, and probably an investment manager in the scope of The Investment Companies act of 1933.

And of course when coupled with a lease... that's a whole new regulatory mess, so much so that that the NC legislature got involved to put in minimal rules for 'legal' lease options.

You can search their NMLS # and then look at the section that says "State Regulatory Actions".

If he has valid comps in your area sold in the last 6 to 8 months...sounds like you can make a complaint to his licensing regulatory body.

My guess is this might be frowned upon by government regulatory institutions - but I don't know.

@Chris Seveney @Andy Mirza I would think one benefit of having a neutral 3rd party servicing your loans is that when it came time to sell your paper, the quality of the payment history couldn't be called into question by a potential note buyer, vs. the note buyer having to take your word for it if you are doing your own servicing.Still, servicing OTHER people's notes might be a business worth looking into, depending upon the potential profits margins vs. regulatory headache. 

We may not see much regulatory action immediately, as it will most likely take years for violations to be uncovered.Enjoy the holidays :)

The current economic and regulatory situation is causing many existing businesses to take a wait and see attitude even when they are turning a profit.I suspect if jobs are created soon you will see more and more cottage industries develop.

No conventional lender makes a pure purchase money loan without proof of funds, it's a legal requirement under several regulatory angles, money laundering, drug money or illegal activities etc. with funds needing to be verified as to the source of funds or held for more than 90 days.

They do this in two ways (loan loss reserves and regulatory restrictions on new business).