I own a few communities, and we have a Dodd Frank compliant mortgage originating business doing installment sales to residents in each community
Lately I have been approached by friends who want to step into my shoes and do some chattel lending. I’d backstop the loans to entice their involvement. I’d also handle the screening and repo actions if we get some defaults.
My question is - provided they invest into my licensed entity, what pitfalls should I be aware of?
Any help/guidance would be appreciated - thank you!
I own a Dodd Frank compliant mortgage originating company that is originating mortgages in my communities. The investors I speak of want to commit money to my mortgage company so that they can participate in direct consumer lending.
The investors would pick a few homes and lend say $30-40K to consumers at 10% on a 20 yr amortization schedule, which would earn them better yield than their existing fixed income portfolios would
I used to be trust deed investor but stopped before DF. However, my brother still is and we talk shop all the time. He does a lot of deals that fit your situation. I see no problem with it unless you run afoul of the certified investor requirements. (Which as I remember means the investor has at least $1M in financial assets that did not fall into their lap from the sky.) Over the years I did many many deals and the issue of proving I was a certified investor was never brought up, so maybe it does not apply to privately funding a mortgage.
So, are you able to generate mortgages on other people’s POHs? I have parks in SD, NE and IL.
Hey, that is a very long answer so if you call or email me we can talk about it. The shortest answer I can give is that it is all about structure and the formal agreements you must have to stay legal and to protect your investors.
You have a good problem and relatively easy to solve.