Private mortgage note investor reporting is the discipline of converting daily servicing data — payments, escrows, defaults, and reserves — into a verifiable, regulator-aligned record an investor uses to value the asset. For private lenders, brokers, and note investors, the report is not paperwork. It is the document that decides whether capital stays, scales, or walks.

Key takeaways

  • Investor trust in private mortgage notes is built on seven measurable pillars: accuracy, transparency, timeliness, compliance, security, accessibility, and contextual narrative.
  • Mortgage Bankers Association SOSF data shows servicing a performing loan costs $176 per year — non-performing loans cost $1,573 per year. Reporting quality drives which side of that ledger a portfolio sits on.
  • J.D. Power’s 2025 mortgage servicer satisfaction index hit an all-time low of 596 out of 1,000 — a direct signal that borrower-facing communication, the same engine that produces investor data, is breaking at scale.
  • The California DRE flagged trust-fund accounting violations as the #1 enforcement category in its August 2025 Licensee Advisory. Investor reporting is the audit trail that proves trust funds are intact.
  • Private lending now represents roughly $2 trillion in assets under management, with top-100 volume up 25.3% in 2024. Capital that scales this fast demands institutional-grade reporting.
  • Note Servicing Center handles business-purpose private mortgage loans and consumer fixed-rate mortgage loans only. Construction loans, builder loans, HELOCs, and ARMs sit outside our scope.

Table of contents

Dive deeper into the cluster

This pillar is the anchor for a full library of satellite guides. Use the groupings below to drill into the specific reporting discipline relevant to your portfolio.

Foundations & the seven elements

Compliance & federal transparency

Technology, automation & portals

Data security & safeguarding capital

Hard money & specialized lender playbooks

Seller carryback & small-portfolio reporting

Glossaries & statement decoding

Capital strategy & growth

Risk, cost & due diligence

Communication, storytelling & cadence

What is private mortgage note investor reporting and why does it matter?

Private mortgage note investor reporting is the structured, recurring delivery of loan-level performance data — principal balances, interest accruals, escrow movement, delinquency status, default activity, and trust-account reconciliation — to the parties holding economic interest in the note. It exists because a private mortgage is not a tradeable security with a public ticker. Its value is reconstructed every reporting period from the servicer’s books.

For a private lender, the report is the proof that the asset is performing. For a broker, it is the document that justifies fees and renews the relationship. For a note investor, it is the only window into a portfolio held by someone else’s hand. When that window is clean, capital stays. When it is fogged, capital exits and rarely returns.

The stakes have escalated. Private lending sits at roughly $2 trillion in assets under management, and top-100 volume grew 25.3% in 2024 according to industry tracking. Capital this size flows toward operators who report like institutions and away from operators who email a spreadsheet on the 15th. The 2025 J.D. Power U.S. Mortgage Servicer Satisfaction Study landed at 596 out of 1,000 — the lowest score the index has recorded — signaling that even large institutional servicers are losing the trust war on communication.

Private mortgage note investor reporting matters because it is the single mechanism that turns operational discipline into investor confidence, and investor confidence into renewed capital. Every other line item in a lender’s P&L sits downstream of that loop.

What are the seven pillars of a trustworthy investor report?

A trustworthy report rests on seven structural pillars. Remove any one and the report becomes a liability instead of an asset.

  1. Accuracy. Every dollar reconciles to the servicing ledger, the trust account bank statement, and the borrower payment history. No rounding. No estimates. The California DRE’s August 2025 Licensee Advisory ranked trust-fund accounting violations as the #1 enforcement category — accuracy is a regulatory floor, not an aspiration.
  2. Transparency. The investor sees how each number was calculated. Payment application order, late-fee logic, escrow disbursements, and impound balances are exposed, not hidden behind a summary line.
  3. Timeliness. Reports arrive on a published cadence — month-end close within a defined number of business days, with quarterly and annual roll-ups available on demand.
  4. Compliance. The report aligns with RESPA, TILA, state servicing statutes, and any applicable PLTA-style transparency mandates. The format itself reflects the regulatory framework.
  5. Security. Delivery happens through encrypted channels. The underlying servicing system uses access controls, audit logs, and SOC-aligned safeguards.
  6. Accessibility. Current and historical reports are retrievable on demand through a portal, not buried in an email thread.
  7. Narrative context. Numbers come with explanation when something unusual happens — a delinquency cure, a workout modification, a hazard claim — so the investor reads the story and the spreadsheet at the same time.

These seven pillars are interlocking. Accuracy without timeliness arrives too late to act on. Transparency without compliance exposes the lender. Security without accessibility frustrates the investor. The whole structure has to stand together.

Expert Perspective

Lenders who lose investors rarely lose them on yield. They lose them on the third missed report. From our vantage point boarding hundreds of private notes, the pattern is identical: a lender starts strong, scales past the point where spreadsheets hold together, and the next reporting cycle slips by three days, then a week. By the time the lender notices, the investor has already taken the next deal somewhere else. Reporting discipline is the cheapest insurance against capital flight a private lender will ever buy — and the most expensive thing they ever skip.

Why does reporting quality decide whether private capital stays or leaves?

Capital is mobile. A private mortgage investor with a six-figure or seven-figure check has alternatives — other lenders, other notes, public debt, syndicated funds. The decision to roll capital back into the next deal is rarely made on yield alone. It is made on the friction of holding the position. Friction lives inside the report.

When reports arrive on time, balance to the penny, and explain anomalies before the investor has to ask, the holding experience feels institutional. The investor renews. When reports drift, miss reconciliation, or surprise the investor with a delinquency the servicer already knew about, the holding experience feels amateur. The investor exits at the next maturity and tells two peers on the way out.

The economics behind this dynamic are unambiguous. Mortgage Bankers Association Servicing Operations Study and Forum (SOSF) 2024 data pegs the all-in direct cost of servicing a performing loan at $176 per loan per year. A non-performing loan costs $1,573 per loan per year — nearly nine times more. Reports are the early-warning system that keeps loans on the performing side of that ledger by surfacing payment slippage, escrow shortfalls, and insurance lapses while they are still inexpensive to fix.

Capital retention also compounds. The investor who renews three deals in a row refers a peer. The peer brings two deals and another check. The lender who built reporting discipline year one now has a multi-investor pipeline year three with no marketing spend. The lender who skipped reporting discipline year one is still cold-pitching new investors to replace the ones who left.

How does reconciliation accuracy protect investor capital?

Reconciliation is the single most important technical discipline behind a trustworthy report. It is the process of proving that three independent records — the servicing system ledger, the trust account bank statement, and the investor sub-ledger — agree to the cent for every position, every period.

When reconciliation is performed daily and signed off monthly, three things happen. First, errors surface within twenty-four hours, when they are still cheap to correct. Second, the lender holds an audit trail that satisfies state regulators on demand. Third, the investor receives a report that has already been proven against bank-level evidence before it leaves the building.

When reconciliation is skipped or rushed, errors compound. A misapplied payment in February becomes a wrong principal balance in March, a wrong interest accrual in April, and a credibility crisis in May when the investor’s CPA finds the discrepancy. The CA DRE’s enforcement data is consistent on this point — trust-fund accounting failures are the #1 violation category, and the underlying cause is almost always reconciliation that was deferred until it was unrecoverable.

Strong reconciliation practice has four non-negotiables: a daily three-way tie between cash, ledger, and sub-ledger; written variance thresholds that trigger investigation; documented sign-off by a second set of eyes; and an immutable audit log that timestamps every adjustment. Investor reports built on top of this discipline carry the weight of evidence. Investor reports built on top of unreconciled data carry the weight of opinion.

What does CFPB, RESPA, and TILA compliance demand from private lender reporting?

Private lender reporting sits inside a layered regulatory environment. The Real Estate Settlement Procedures Act (RESPA) governs escrow handling, error resolution timelines, and notice requirements. The Truth in Lending Act (TILA) governs disclosure of credit terms and ongoing payment information for consumer-purpose loans. The Consumer Financial Protection Bureau (CFPB) enforces both and publishes mortgage servicing rules under Regulation X and Regulation Z. State servicing statutes layer on top.

For a private lender, the reporting implication is direct. Consumer fixed-rate mortgage loans inside Note Servicing Center’s scope require periodic statements that meet Regulation Z content standards, escrow accounting that meets RESPA’s annual statement requirements, and error-resolution workflows that respond to written notices within statutory windows. Business-purpose private mortgage loans sit outside most consumer servicing rules, but state licensing and trust-fund handling rules still apply — California’s DRE trust-fund framework is the example most lenders feel first.

An investor report that ignores this framework creates two distinct exposures. The first is regulatory: a missed escrow analysis or a misformatted periodic statement triggers enforcement risk that lands on the lender, not the investor. The second is reputational: institutional capital screens for compliance posture during due diligence. A report that does not show evidence of regulatory alignment fails the screen before yield is even discussed.

The PLTA-style federal transparency conversation expanding through 2025 and 2026 raises the bar further. Reporting that anticipates the trajectory — disclosure of beneficial ownership, standardized loan-level fields, machine-readable formats — positions the lender ahead of the rule. Reporting that ignores it positions the lender behind enforcement.

How does reporting cadence shape investor confidence?

Cadence is the rhythm of reporting — how often, on what calendar day, in what format. Investors do not measure cadence by what is delivered. They measure it by what is missed.

The institutional standard for a private mortgage portfolio is monthly statements delivered within five to seven business days of month-end close, supplemented by quarterly portfolio reviews, an annual escrow analysis where applicable, and event-driven notices for delinquency, default, payoff, or insurance lapse. Anything slower than monthly invites the investor to wonder what is being concealed. Anything faster than weekly produces noise without insight.

The hidden lever inside cadence is consistency. An investor who receives the report on the seventh business day every month for two years stops checking. The relationship moves from anxiety to autopilot. An investor who receives the report on the seventh, then the twelfth, then the fifteenth begins checking daily. The relationship moves from autopilot to scrutiny. Scrutiny is the precursor to redemption requests.

Cadence discipline is also where automation pays off. A servicing platform that closes the month on a defined trigger, runs reconciliation against bank feeds, generates statements from a templated layer, and pushes them to a portal eliminates the human-bottleneck failure modes that destroy cadence in spreadsheet-based operations. The Thomas/NSC operational case demonstrates the shift: a paper-intensive servicing intake that previously took 45 minutes is now completed in 1 minute through automated boarding. The same compression applies to monthly reporting cycles when the platform is built for it.

Expert Perspective

Investors do not read every line of every report. What they do is notice the day it arrives. We have onboarded portfolios where the prior servicer was technically accurate but chronically late — and the investor base was already drafting redemption letters by the time we boarded. The fix is not better-looking reports. The fix is a closing calendar that publishes a date and hits it for twelve consecutive months. Trust is a track record of small promises kept on a schedule, not a single elegant document.

What role does data security play in investor reporting?

Investor reports carry sensitive financial data — borrower names, property addresses, loan terms, payment histories, bank account fragments, social security numbers in some workflows. A breach of this data is a breach of the investor’s underlying asset and a breach of the borrower’s privacy in the same incident.

Strong data security inside investor reporting has three layers. The transport layer requires TLS-encrypted delivery and authenticated portal access — never unencrypted email attachments. The storage layer requires encryption at rest, role-based access controls, and immutable audit logs that record every view and download. The operational layer requires written information security policies, incident response procedures, and regular access reviews that remove credentials when staff or partners change.

The CFPB has signaled increasing attention to data-handling practices inside mortgage servicing, and state regulators are following. New York’s DFS Cybersecurity Regulation (23 NYCRR 500) and California’s CCPA/CPRA framework already impose specific obligations on entities that hold consumer financial data. A private lender whose investor reporting workflow runs through unencrypted email or a shared cloud folder is carrying compliance risk that does not appear on any P&L line until the breach happens.

Security also functions as a screening signal. Sophisticated investors — family offices, RIAs, institutional allocators — ask security questions during diligence. A lender who answers with portal logs, SOC-aligned controls, and documented incident response wins the allocation. A lender who answers with “we send PDFs from our servicing email” loses it.

How do digital portals replace static PDFs in modern reporting?

The emailed PDF was the format of investor reporting from roughly 2005 to 2020. It is not the format of 2026. Modern reporting runs on digital portals — authenticated, role-permissioned web environments where investors log in to view current positions, download historical statements, and pull on-demand data.

The shift from PDF to portal changes three things. First, it eliminates the inbox as a system of record — a portal is searchable, indexed, and persistent. Second, it adds real-time access to underlying data — the investor pulls a balance at 11 PM without waiting for the next reporting cycle. Third, it produces analytics on engagement — the lender sees which investors are reading, which are dormant, and which are showing pre-redemption behavior.

Industry data on the conversion is consistent. Hard money operators who moved from PDF to portal-based reporting documented retention improvements approaching 30% in published case work. The mechanism is straightforward: when reports are easier to access, investors check more frequently, develop confidence faster, and renew more readily.

Portal architecture matters. The platform has to integrate with the servicing system so that report data is generated from the live ledger, not re-keyed. It has to enforce permissions at the loan level so an investor sees only their positions. It has to produce a documented audit trail of access. And it has to operate inside the lender’s compliance framework — RESPA-aligned escrow disclosures, TILA-aligned periodic statements where applicable, and state-specific notices where required.

What metrics belong on every private mortgage investor report?

The minimum data set for a credible investor report is broader than most spreadsheet templates contain. At the loan level, each position requires unpaid principal balance, scheduled and actual payment, paid-to date, accrued interest, escrow balance and movement, late fee balance, delinquency bucket, and any modification or workout flag. At the portfolio level, the report rolls those fields into weighted-average coupon, weighted-average maturity, delinquency distribution, prepayment activity, and net distributable cash.

Beyond the standard fields, modern investor reporting layers in risk and exit metrics. Loan-to-value at origination and current LTV against refreshed valuations. Debt service coverage where the underlying property is income-producing. Property tax and hazard insurance status with paid-through dates. Title and lien-position confirmation where the data supports it. For seller-carryback portfolios, the borrower payment history with seasoning months — the field that drives note-sale pricing later.

The metric most lenders skip is reserves and impound status. Investors holding fractional or whole-note positions need to see exactly how much trust money sits in the escrow account against pending tax and insurance obligations. A clean impound table on every report ends 80% of investor questions before they are asked.

The final layer is event narrative. When a loan moves from current to 30 days late, the report names it. When a workout is approved, the report describes the modified terms. When a default proceeds toward foreclosure — and ATTOM Q4 2024 data shows the national average foreclosure timeline now sits at 762 days — the report tracks the timeline against the legal milestones. Numbers without narrative leave investors guessing. Numbers with narrative end the call before it starts.

How does reporting transparency influence note sale value at exit?

Every private mortgage note has an exit. The lender refinances, the borrower pays off, the investor sells the position to a secondary buyer, or the asset moves through default to disposition. In each path, the value realized at exit is a function of the documentation available to support it. Reporting transparency over the life of the loan is the documentation.

Note buyers price seasoning, payment history, and reconciled servicing data directly into bid spreads. A note with twenty-four months of clean, reconciled payments documented in monthly investor reports carries a tighter bid than the same note with patchy spreadsheet history — even if the underlying borrower is identical. The buyer is pricing risk-of-the-record, not risk-of-the-borrower, and the record was built one report at a time.

For seller-carryback notes specifically, the gap is severe. A seller-carryback portfolio professionally serviced and reported sells at a meaningfully better yield than a self-serviced portfolio with handwritten ledgers, because the buyer assumes additional diligence cost and additional fraud risk for the unprofessional record. The seller who skipped reporting collects less at exit.

Default disposition shows the same pattern. Foreclosure cost data ranges from $50,000 to $80,000 in judicial states and under $30,000 in non-judicial states, before any deficiency exposure. The lender with a complete reporting trail — payment history, default notices, workout offers, modification declines — moves through the legal process faster and recovers more. The lender without it loses months and dollars to evidentiary gaps that should have been closed in real time.

Why does third-party servicing strengthen investor trust more than in-house reporting?

Investors discount reports produced by the same entity that originated the loan. The discount is not personal — it is structural. When the lender services its own portfolio and reports its own performance, the investor reads a document that has no independent verification layer. Conflicts of interest are unresolved.

Third-party servicing — boarding loans with an independent licensed servicer like Note Servicing Center — resolves the conflict. The servicer holds trust funds in segregated accounts, posts payments against the actual borrower record, generates statements from neutral systems, and reports performance based on what happened, not what the lender wants to show. The investor reads a document produced by an entity that has no stake in the loan’s apparent performance.

This independence is operationally consequential. When delinquency starts, an independent servicer reports it the day it crosses the threshold. An in-house operation faces internal pressure to suppress the same data until a workout is in motion. When trust-fund balances move, an independent servicer reconciles to bank statements that the lender does not control. An in-house operation lives inside a single set of books that the same person manages and reports.

Institutional capital reads this distinction immediately. Family offices, RIAs, and fund-of-fund allocators write into private mortgage strategies that use independent servicers and decline strategies that do not. The structural separation is the gate. Reporting that comes from the servicer with the segregated trust account passes. Reporting that comes from the originator’s own ledger does not.

Note Servicing Center handles business-purpose private mortgage loans and consumer fixed-rate mortgage loans. Construction loans, builder loans, HELOCs, and ARMs sit outside our servicing scope — lenders working in those products require a different operational fit.

Expert Perspective

The pattern we see in investor due diligence packages is consistent: the second question after “who originates” is “who services and reports.” When the answer is the same entity, sophisticated capital quietly walks. When the answer is an independent licensed servicer with segregated trust accounts, the conversation moves to terms. We have onboarded lenders who watched their first institutional check arrive within ninety days of moving servicing off their internal team — not because the lender’s underwriting changed, but because the reporting source changed. Independence is the cheapest credibility upgrade in the industry.

What are the warning signs of inadequate investor reporting?

Inadequate investor reporting announces itself before it produces a crisis. The signals are observable and the response window is short.

The first signal is variance in cadence. Reports that arrived on the seventh business day in January and the fourteenth in February are flashing yellow regardless of accuracy. The second signal is reconciliation drift — investor balances that disagree with the servicer’s ledger by amounts that grow rather than resolve over consecutive months. The third signal is anomaly opacity — an unusual line item that appears without explanation and stays unexplained through the next two cycles.

Other warning signs sit deeper. Escrow balances that move without corresponding tax or insurance disbursement narrative. Late-fee accruals that compound without a documented borrower notice trail. Trust-account totals that do not tie to bank statements when the investor or auditor asks. Statements that lack a periodic-statement disclosure block on consumer-purpose loans. Portal access that times out, lacks audit logs, or shows the same downloadable PDF for three different reporting periods.

Each of these is recoverable in isolation. In combination, they signal an operation that has outgrown its tooling. The recovery path is not heroic effort from the existing team — that team is already working as hard as it can. The recovery path is platform: an independent servicer, a reconciled trust account, a portal-based reporting layer, and a closing calendar that publishes a cadence and holds it. Lenders who make that move keep their investors. Lenders who do not are reading their own warning signs in retrospect after the redemption letter arrives.

Frequently asked questions

What is the difference between borrower statements and investor reports for a private mortgage note?

Borrower statements are consumer-facing documents required under Regulation Z for consumer-purpose loans, showing the borrower their balance, payment, and disclosures. Investor reports are servicer-to-investor documents showing the economic position of the note holder — principal balance, accrued interest, escrow movement, delinquency status, and trust-account reconciliation. Both are produced from the same servicing data but serve different audiences and meet different rule sets.

How frequently should a private lender deliver investor reports?

The institutional baseline is monthly statements delivered within five to seven business days of month-end close, with quarterly portfolio reviews, an annual escrow analysis where applicable, and event-driven notices for delinquency, default, payoff, and insurance lapse. Cadence consistency matters as much as frequency — the same business day every month builds more trust than an aggressive schedule that slips.

Are private mortgage investor reports regulated by the CFPB?

Direct CFPB jurisdiction over investor reporting is limited, but the underlying servicing data feeding those reports is regulated when the loan is consumer-purpose. RESPA governs escrow accounting and error resolution, TILA governs periodic statements, and CFPB Regulation X and Regulation Z apply to consumer mortgage servicing. Business-purpose private mortgage loans sit outside most consumer rules but remain subject to state servicing statutes and trust-fund handling requirements.

What is PLTA and how does it affect private mortgage reporting?

PLTA refers to the federal Private Lending Transparency Act framework under discussion through 2025 and 2026, which proposes standardized disclosure and reporting requirements for private mortgage lenders historically outside CFPB direct supervision. Lenders building reporting infrastructure today that anticipates standardized loan-level fields, beneficial ownership disclosure, and machine-readable formats are positioning ahead of the rule rather than scrambling behind it.

Why do investors prefer reports from third-party servicers?

Reports from third-party servicers carry independence. The servicer holds trust funds in segregated accounts, posts payments against neutral systems, and reports performance based on what happened in the bank account rather than what the originator wants to show. Sophisticated capital — family offices, RIAs, institutional allocators — screens for this separation during diligence and discounts reporting that comes from the originator’s own ledger.

What metrics matter most on a private mortgage investor report?

At minimum: unpaid principal balance, scheduled vs. actual payment, paid-to date, accrued interest, escrow balance and movement, delinquency bucket, late-fee status, and any modification flag. Above the baseline: current LTV, debt-service coverage where applicable, tax and insurance paid-through dates, lien-position confirmation, and trust-account reserves. For seller-carryback portfolios, seasoned payment history is the metric that drives later note-sale pricing.

How does reporting quality affect the value of a note at sale?

Note buyers price servicing-record quality directly into bids. A note with twenty-four months of reconciled monthly investor reports prices tighter than the identical note with patchy spreadsheet history, because the buyer prices risk-of-the-record alongside risk-of-the-borrower. Seller-carryback portfolios with professional servicing histories sell at meaningfully better yields than self-serviced portfolios with handwritten ledgers.

What does it cost to service a non-performing loan vs. a performing loan?

Mortgage Bankers Association SOSF 2024 data places the all-in direct cost of servicing a performing loan at $176 per loan per year and a non-performing loan at $1,573 per loan per year — nearly nine times higher. Strong investor reporting functions as the early-warning system that surfaces payment slippage and escrow shortfalls while corrections are still inexpensive.

What loan types does Note Servicing Center service?

Note Servicing Center services business-purpose private mortgage loans and consumer fixed-rate mortgage loans. We do not service construction loans, builder loans, home equity lines of credit (HELOCs), or adjustable-rate mortgages (ARMs). Lenders working in out-of-scope products require a different operational fit.

How long does foreclosure take if a private mortgage defaults?

ATTOM Q4 2024 data places the national average foreclosure timeline at 762 days. Judicial-state foreclosures cost $50,000 to $80,000 before deficiency exposure; non-judicial foreclosures run under $30,000. A complete servicing-and-reporting trail — payment history, default notices, workout offers, modification declines — shortens the path and improves recovery. Gaps in that trail extend it and reduce it.

Sources & further reading

  • Mortgage Bankers Association, Servicing Operations Study and Forum (SOSF) 2024 — direct servicing cost benchmarks: mba.org
  • ATTOM Data Solutions, Q4 2024 U.S. Foreclosure Market Report — 762-day national foreclosure average: attomdata.com
  • J.D. Power 2025 U.S. Mortgage Servicer Satisfaction Study — 596/1,000 all-time low: jdpower.com
  • Consumer Financial Protection Bureau, Mortgage Servicing Rules under Regulations X and Z: consumerfinance.gov
  • California Department of Real Estate, August 2025 Licensee Advisory — trust-fund accounting violations as #1 enforcement category: dre.ca.gov
  • Federal Reserve / industry tracking on private credit and private lending — $2T AUM scale and 25.3% top-100 volume growth in 2024.
  • RESPA (12 CFR Part 1024) and TILA (12 CFR Part 1026) — federal servicing and disclosure framework.

Summary & next steps

Private mortgage note investor reporting is not a back-office artifact. It is the operating mechanism that determines whether private capital stays, scales, and pays a premium at exit. The seven pillars — accuracy, transparency, timeliness, compliance, security, accessibility, and narrative context — are interlocking. Reconciliation discipline turns numbers into evidence. Cadence consistency turns evidence into trust. Independent servicing turns trust into institutional credibility. Portal-based delivery turns credibility into retention. Compliance alignment turns retention into a defensible portfolio. And the warning signs — cadence drift, reconciliation drift, anomaly opacity — announce themselves before the redemption letter arrives.

The lenders who win the next decade of private mortgage capital are the ones who treat reporting as infrastructure, not paperwork. The lenders who lose are the ones who keep emailing PDFs.

Note Servicing Center boards business-purpose private mortgage loans and consumer fixed-rate mortgage loans onto an independent, licensed servicing platform with reconciled trust accounts, portal-based investor reporting, and a closing calendar that publishes a cadence and holds it. Contact NSC to discuss boarding your portfolio.

This content is for informational purposes only and does not constitute legal, financial, or regulatory advice. Lending and servicing regulations vary by state. Consult a qualified attorney before structuring any loan.