Lesson 101: Basic Principles of Hard Money Lending

Lesson 101: Basic Principles of Hard Money Lending

The Basic Principles of Hard Money Lending is hard money boot camp.  It does not make you a Navy Seal overnight, but you will be a very competent foot soldier.  Seal training can come later.  The course covers the soup to nuts of private money lending in a very practical way.  It is not a theory class.  It is a practical how-to class.  How to do it right the first time.  The class will take about 5-10 hours of one-on-one time with Dennis Doss.  You can do it by telephone or any video conferencing app.  You will need screen sharing ability.

The course is broken down into separately digestible chunks, so you are not overloaded with information.  We recommend that you take no more than 3 classes per week.  That way, between sessions you can study your notes, come up with follow-up questions and frankly, give your brain a rest.  The upload of information into your brain is going to be intense.  Here is how Dennis will break it down for you:

  • Your Mortgage Company. In this segment, Dennis will cover entity structures, licensing, DRE online registration, advertising, loan officer requirements, capitalization, DBAs (FBNs), banking and other nuts and bolts of owning a mortgage company.
  • Defining Your Products. In this session, he will help you define the types of loans you will offer, including the competitive landscape, current rates, and consumer vs business credit.
  • Landing the Deal. Dennis will walk you step by step through the loan origination process, including the questions to ask to avoid wasting time, creating a letter of intent (template provided), loan applications, clarifying agency, and early borrower disclosures.
  • Underwriting the Deal. Before you present this loan to investors, you must know it is solid.  He will walk you through the process of opening a title order, engaging an appraiser, using quick valuation tools, list of docs to ask the borrower for, the role of credit reports, background checks, and recognizing identity theft.
  • The Private Investor Process – Getting the Money. Obtaining private investors, the Loan Summary (template provided), the private investor disclosure process, obtaining a “spread” in the deal, servicing retained vs released, the sale and servicing agreement (templates provided).  Dennis will walk through a list of disclosures (hyperlinks or templates provided) so you understand the role of each.  We will also discuss the handling of investor money for the loan and the lawful sequence you must follow to do it correctly.
  • Documenting the Loan from the Borrower Side. Here, he will discuss documentation alternatives, such as a loan doc service vs in-house vs attorney-closed, what documents your package should contain (list provided), guarantees, role of environmental guarantees and how to protect yourself from forgery claims.  Dennis will go through an actual set of loan documents to discuss how and why they are used in loan transactions.
  • Fractionalizing a Loan. Some loans require the use of multiple investors.  He will cover your alternatives, including the multi-lender rule, Corp. Code 25102(f), and SEC Rule 506, as well as your DRE reporting responsibilities once you start fractionalizing loans.
  • Analyzing Title. Dennis will walk you through a preliminary report from a title company and discuss what to look for, endorsements, exclusions, and other title related issues.
  • Closing and Booking the Loan for Servicing. He will go through the final closing process and what you are expected to do to finish the deal.  Then, Dennis will shift to boarding the loan with a servicer and your role as the loan is being collected.
  • DRE Reporting. In this final chapter, he will take you through your filing and reporting responsibilities with the DRE.

The Rules: No recording of any kind; extra charge for more than one trainee; scheduling by appointment only; legal advice on specific deals you are working on is not included; you will be asked to sign a simple engagement letter; we will check for any conflicts and decline the work if there is one.

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© Doss Law, LLP.  Attorney advertising materials.  These materials have been prepared for educational purposes only and are not legal advice.  This information is not intended to create an attorney-client relationship.  Consult a knowledgeable lawyer before implementing any of the ideas in this publication.

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