Answer = INCOME, CREDIT, COLLATERAL!!
Underwriting seller financed loans can be an arduous process. With the SAFE Act final rule now in effect, how does the Real Estate Broker or Realtor navigate this process legally, ethically, and competently? This is a common question asked of Note Builders and a growing concern in the industry.
We’ve covered the legal aspects of seller financing in earlier articles. The new laws are complicated and make it extremely difficult for sales people involved in these transactions to ensure compliance without a MLO license. The question is, if you’re not a licensed MLO, do you possess the qualifications to underwrite a transaction and advise a seller or buyer on credit worthiness, income, and collateral? This can become a slippery slope in agency law as there are many potential minefields in processing these transactions.
Income, credit, and collateral are the key measures to underwriting any loan. All three need to come together in unison for the loan to be properly underwritten. The typical seller financed scenario is going to be a subprime transaction. Especially now, in the current market, buyers with less than stellar credit are looking for alternative financing scenarios. These scenarios can work if properly underwritten by experienced professionals. Proper documentation is going to be the key moving forward in real estate finance as well as protecting agents involved in these transactions.
Fellow professionals, please remember that you have a fiduciary duty to your clients on these transactions. Real estate finance is a niche market. Note Builders is licensed to handle these transactions. Feel free to communicate with us to ensure success on your deal. Thanks!
Note Builders is a licensed Broker and MLO in California. We will have affiliates nationwide and look forward to properly structuring your creative transactions!
Author: Jamall Broussard is the Chief Executive Officer of Note Builders, Inc. Note Builders is a Mortgage Loan Originator service that can be assigned the responsibility of compliance in a seller financed transaction. DRE # 01898702 NMLS # 517367, Notebuilders.com
Comments(2)