Re: License to buy - Posted by David Butler
Posted by David Butler on July 26, 2004 at 12:20:45:
Not only does is the definition clear, the Ch. 2 cite you offer is also clear. A mortgage lender is just that - a person who originates loans. A note finder finds existing notes - privately held notes almost exclusively - and, as discussed extensively here in this Forum… notes that were created by way of the seller financing part, or all of the sale price of his property, by carrying back a note on the property sold (i.e. seller carryback purchase money mortgage).
He then sells the information on the notes he finds to an investor; or alternatively, he buys the note himself and “flips” it to an end investor.
Making loans is much different than buying existing loans. However, another difference exists. In some states, buying loans originated by mortgage lenders may also require a lenders’ license. Buying privately held “seller carryback purchase money mortgages” does not, in most states.
In the several states where some type of license MAY be required (lending, mortgage broker, or real estate broker) for regularly buying and selling these types of notes, there are also many exceptions clearly spelled out in the applicable statutes.
For more specific details, you may want look through the mountain of threads related to “licensing”; along with some relevant discussion related to “creating notes”; “purchase money mortgage”; “seller’s exemption”; “owner carryback”; and “ostensible loan”. Enter any of these terms as your keywords in the “search” facility at the top of this Forum, and you’ll pull up a lot of helpful discussion that will help you gain a better understanding of the big picture in terms of the private cash flow industry.
As to the term “secondary market” - a secondary market is that in which people or companies buy and sell EXISTING loans.
In traditional financial markets, the “secondary market” buyers are generally large institutional players (the two largest being “Fannie Mae” and “Freddie Mac”). In the private cash flow industry, there are a variety of buyers making up the “secondary market” - but the product is primarily privately held notes, rather than institutionally originated loans.
Hope that helps, and Happy Hunting!
David P. Butler