Private Trust Deed Lending Disclosure and BRE Filing Summary
By Dennis H. Doss, Esq.
The following is an non-exhaustive summary of key disclosures and filings for private money lending using a BRE broker’s license. This memo is education material, not legal advise. Legal counsel should review your final docs before you use them and your specific BRE filing requirements.
Borrower Disclosures in Non-Consumer Loans
- Mortgage Loan Disclosure Statement (RE 882, 883 or 885) must be given to borrowers within 3 business days of loan application and must be signed by the borrower and broker. Partially amortize all 1-4 SFR loans to avoid having to use the more complex 883 and 885 form:
- State and Federal Fair Lending Notices. Refer to the BRE as the agency in the state disclosure. State Form: http://www.dre.ca.gov/files/pdf/forms/re867.pdf
- Notice of Right to Receive a Copy of the Appraisal.
- Broker Privacy Policies
Lender Disclosures in Non-Consumer Real Estate Loans
- Investor Questionnaire, RE 870 (an annual Questionnaire):
This form is used to analyze the “suitability” of the investment for the investor. Avoid weak investors.
- Lender/Purchaser Disclosure Statement. 851a is used when the investor funds the loan. 851b is used when the investor purchases all or any portion of an existing loan. RE851a to be signed by investors before taking their money:
If the investor will be funding the loan, require them to fund directly into the loan escrow. If you are selling them a loan or piece of a loan, they should fund to your operating account but you must record the assignment of deed of trust to them either before or the same day.\
- Securities Notation. This is a form that informs the investor what securities exemption you are relying upon. This language is incorporated into the Doss Law Loan Sale and Servicing Agreements.
- 10% Statement. This is a form whereby the investor represents the trust deed investment does not exceed 10% of their net worth excluding home. It is incorporated into the Doss Law Loan Sale and Servicing Agreements.
- IRS W-9. Use by the servicer to report taxable income.
- Loan Servicing Agreement. A single investor can service his or her own loan. If more than one investor is involved or the broker is retaining a “spread,” a Loan Servicing Agreement is required.
- Appraisal Waiver. Unless the broker is providing a current appraisal to the investor, the investor must sign a written waiver of their right to an appraisal.
- Preliminary Title Report/Title Policy.
- Loan Documents and/or Broker Prepared Loan Summary.
BRE Private Money Filings
- RE 866 Mortgage Loan Activity Notification. This is a one time filing by all brokers doing mortgage loans. https://secure.dre.ca.gov/elicensing/nmls.asp
- RE 860 Multi-Lender Transaction Notice. This must be filed if you created any multi-lender notes. A one time filing. http://www.dre.ca.gov/files/pdf/forms/re860.pdf
- RE 855 Trust Fund Status Report. Required quarterly by any servicer that has trust funds. http://www.dre.ca.gov/files/pdf/forms/re855.pdf
- RE 854 Trust Fund Non-Accountability Report. Required quarterly by any broker that fractionalizes loans or meets the threshold volume requirements explained in the Threshold Notification Form (RE 853) (http://www.dre.ca.gov/files/pdf/forms/re853.pdf) is required to be filed by all threshold brokers, quarterly, or if it has trust funds, the 855.
- RE853 Threshold Notification A one time filing required if you exceed the thresholds listed in the instructions. Once filed you must file either a 855 or 853 quarterly. http://www.dre.ca.gov/files/pdf/forms/re853.pdf
- Mortgage Loan Business Activity Report. Online filing due within 90 days after the end of your fiscal year. https://www2.dre.ca.gov/bars/