Sun Pacific Investor Quarterly
A Newsletter for Investors in Trust Deeds
May 2011 Volume 7 Issue 3
Integrity • Knowledge • Honesty
Message from the Broker…
Instead of my usual message here, I want to remind all of this upcoming…
HARD MONEY INVESTOR SEMINAR
Attend this informal discussion of current regulations impacting Hard Money Investments. Tuesday – May 10th @ 5:30 pm at the offices of Sun Pacific Mortgage – 800 Mendocino Avenue #2, Santa Rosa.
RSVP please to Ari, Forest or Lynn or for your convince you can click RVSP
**SPECIAL GUEST SPEAKER: Santa Rosa Attorney Max Broome will be there to participate in the discussions and answer your questions from a legal perspective.
A Bit More on Predatory Lending
In no particular order here are some of the more relevant topics that apply to Hard Money Investing.
1. Nationwide Mortgage Licensing System and Registry – NMLS. All Mortgage Loan Originators (MLO) need be qualified through this Registry. They have to pass local and federal tests. There are credit checks, criminal background checks, credit checks and financial qualifications. This is above and beyond the state licensing. There is also substantial quarterly and annual reporting. The Mortgage Loan Originator is given a Unique Identifier Number. There is also one for the company he/she works for. Make sure your Broker has this number.
2. Lender Purchaser Disclosure Statement – LPDS. This describes the trust deed offering from the Mortgage Loan Originator. You need to sign this form for each loan you fund.
3. MLDS/GFE. This form must be provided to the borrower within 72 hours of the MLO receiving the loan application.
4. High Priced Mortgage Loan – HPML. There are 2 tests to see if this loan is an HPML. One is the Fee Test and the other is the Interest Rate Test. Both the feds and the State of California have these 2 ways of determining if the if the loan is an HPML. It does not in any way limit the fees that can be charged or the interest rate on the note. It does require additional disclosures.
5. Ability to Repay. The feds want anyone borrowing money against a residential property with 1 to 4 units, to be able to prove they have the ability to repay the loan and their other obligations. This generally applies to the borrowers principal residence.
I think the above are the main areas that an investor should be familiar with. You can go on line and look up any of those areas to get more insight. I’ll continue these Newsletters.
From my review of the regulations currently in effect, there is nothing I have seen that should stop you from making Hard Money loans.
I would suggest that the next time you get approached about doing a loan with a better loan to value or strong borrower or nicer property, that you think about the rate you will require for that loan. Your Broker should be compelled to do that on your behalf as a pattern and practice.
Feel free to call or email me anytime with further questions you may have regarding investing in Deeds of Trust.
I would also like to personally invite you to the Hard Money Investor Seminar. It will expand on these topics mentioned here as well as others that are relevant Hard Money Lending. And if you’re reading this, I’m guessing that’s what you do. Whether you do it a little or a lot, knowledge is power. It certainly applies here because it’s your money!
NMLS Unique Identifier # 289456
Sun Pacific Mortgage & Real Estate
800 Mendocino Avenue Suite # 2
Santa Rosa, CA 95401
or email Forest at [email protected]
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