Question by Kevin:
I currently am I the business of getting properties on contract for about 80% LTV and turning around and assigning the contract to someone who I've offered owner financing for 100% LTV. I qualify my buyers for a loan and sell the paper at a discount at the closing table. My concern has to do with the fact that recently I've been running across more and more people that I know I can qualify (Through a traditional mortgage co) for a loan, and do just that! Fact is that I actually make a lot more money that way. I know that I'm teetering on being a mortgage broker at this point, and my question is: If I put the property on contract first offering to finance it for them, and then advise my potential buyer of the better terms (through a bank), am I considered a broker at this point? Thanks in advance for any information.
Answer By William Bronchick:
Kevin, a "broker" is one who brings two parties together for a fee. Simply
originating notes and selling them at closing is not acting as a broker.
Nor is referring them to a money source. However, if the money source you
refer to gives you a "kick back" that is contingent upon the buyer being
funded, that could be construed as a "brokerage" fee. You need to review
the specific language of your state law on mortgage broker licensing to
determine how far you tread into the "grey area."
Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional.
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