Illinois law question - Posted by bc

Posted by David Butler on March 03, 2004 at 19:40:46:

Hello bc,

Not entirely clear what you are asking for here, exactly - but here’s a couple of things to consider.

One… buying and selling notes is quite different in both function, and in regulation - as distinguished from making loans.

Licensing related to note buying and selling has been discussed extensively here in the Forum previously, and you are likely to gain a better handle on your own situation by first exploring exactly what it is we do in the note business, then comparing that to the previous discussions on licensing… then applying that to your own state.

The following thread would be a great place to start with regard to the “licensing” issue itself (Illinois or elsewhere)…

As to Illinois specifically, the last time I looked, though a Residential Mortgage License is required when selling a note encumbering residential property located in Illinois, IF a conventional or gov’t insured loan; the sale of private seller-carryback purchase money mortgage notes does not require license. Residential property defined as 1 to 4 units, owner-occupied.

Other exceptions include: selling notes secured by commercial properties; notes secured by properties outside Illinois; up to 10 residential notes per year including conventional/gov’t loans, so long as notes were acquired by your own funds for your own investment, and you held each note for at least one year.

By the way, almost none of us in the note business are involved in the last activity, as it relates to buying and selling of conventional or government (FHA; VA) loans! That’s an activity that is pretty much monopolized by the traditional mortgage lending industry, and Wall Street investment bankers… and is a whole other ball game!

Spend an hour or two with the recommending reading above, and where it leads too elsewhere in this web site, and you’ll have a good handle on what you are seeking here. Hope that helps, and best wishes for your success!

David P. Butler

Illinois law question - Posted by bc

Posted by bc on February 25, 2004 at 21:36:51:

I was looking through this legaleze, and can’t tell if there is any problem with one of these three types of transactions. The closest thing I could find was the quoted paragraph, but it sounds like it puts limits on what you can do. License needed? Any opinions as to what the state allows without going through some licensing procedure?

*Offering seller financing when selling your property.

*Asking self directed IRA holders for funds to invest with.

*Buying notes/mortgages secured by real estate. Selling your seller financed note/mortgage to a cash buyer.

Here’s their blurb I ran across-
“Any person or entity that does not originate mortgage loans in the ordinary course of business making or acquiring residential mortgage loans with his or her or its own funds for his or her or its own investment without intent to make, acquire, or resell more than 10 residential mortgage loans in any one calendar year.”

-Thanks for the opinions.