No matter how experienced or fresh you are as a private lender, compliance is essential to the long-term survival of your business. While it is true that many of the intricate and confusing arrays of consumer regulations and standards do not apply to private lenders that make loans for commercial purposes, there are several compliance issues that each private lender must be aware of. Here are some key checklists to go through as a private lender to ensure your business is in safe hands.
- Licensing: As a private lender, understanding the licensing requirements of the state(s) where your business operates is essential. Each state has a varying licensing requirement. Depending on the activities of your business, such as mortgage loan origination, lending, and brokering, you may be required to have more than one license.
- Foreign Registration: Determining whether your business must register with the Secretary of State before lending to a borrower in a new state is another requirement for entering that state. Although sometimes skipped, this step is crucial to guaranteeing your capacity to function in a new state.
- Fees and Charges: The amount and frequency of costs, such as prepayment fines and late fees, are regulated by each state. Certain states have varied regulations regarding these costs for various loan products or borrowers. Thus, you want to be aware of these to ensure your business is not breaking any law.
- Foreclosure: Before setting up your lending business, you might want to be certain of the legislation around a state’s foreclosures. Ask relevant questions such as: Does the state permit non-judicial foreclosure? What are the timescales for a foreclosure? Can the lender make a deficiency claim? Does a borrower have the option to redeem their debt?
Other areas of focus for lenders include Disclosures, HMDA, Table Funding, Housing Act, and other compliance-related issues. Click here to read more.
About Note Servicing Center
Note Servicing Center provides professional, fully compliant loan servicing for private mortgage investors so they can avoid the aggravation of servicing their own loans and just relax and get paid.
Contact us today for more information.