I also stayed away from escrows as much as possible, it's a regulatory pain.

Hi Ben, intriguing idea and I can't answer most of your questions, but the one thing I will throw out at you is that this would likely be considered a commercial loan by most lenders (but not by all) and a lot of folks who specialize in those won't do owner-occupied projects, as the disclosure and regulatory requirements of each don't always jive together.

However, Reg D compliance actually protects the issuer as it is a safe harbor, the issuer utilizing a non safe harbor private placement exemption subjects his offering to interpretation by security regulatory agencies.All this is of little concern to the passive participant as long as he obtains full disclosureWhat is of more concern is the licensing, if any, needed to broker, manage, and service notes.Purchase of existing notes, whether residentential or commercial requires no license.

Almost always, the operators, large and small, need outside help from either a legitimate consultancy or a regulatory law firm or both.

As recent as two years ago, there were many attorneys recommending some of these solutions because they were themselves ignorant of regulatory law and how it works.

I would recommend that the Attorney must be: In the state where you are planning on Wholesaling.A litigating attorney.Experienced with the agent’s/broker’s regulatory board for your state.Familiar with Wholesaling, if you are explaining it to them, they are the wrong attorney.If they are also a licensed broker, that is helpful but not mandatory.You will spend $125 to $1,000 for their advice and it will be the best money you’ve ever spent.Emotions and conjecture on the topic of wholesaling vary widely.

In an abbreviated list we would have to look into the physical property, the title to the real property, the credit worthiness of the borrower - past and future (includes performance), servicing of the loan if originated, the paperwork the loan was originated by and regulatory and compliance issues related to the loan and borrower.  

The result is that whereas 5 years ago passive investors expected little more than an investment summary, investors now expect (and demand) a private placement memorandum, subscription agreement, attorneys opinion, tax opinion, and full compliance with the securities regulatory environment, even on smaller deals. 

Licensing is a component that may be required of a seller, if the regulatory body in their state deems them to be "habitually" providing seller financed mortgages.Here is some comments on the topics put out by NAR...their conclusions and opinions are just that...their conclusions and opinions.SAFE Act Final Rule: Seller Financing and REOs The SAFE Act requires licensing of loan originators under state laws that meet minimum federal requirements.

The Federal financial institutions’ regulatory agencies, the U S Departments of Justice, and the Treasury, may use and share the information collected on a SAR.