Risks of Doing Hard Money Loans Without Adequate Training
We understand. You are starting a new business and money is tight. Why not learn as you go to save the money? The simple reason is that hard money lending is highly regulated and can be contentious. After all, your investors will be making millions of dollars of loans to less than perfect borrowers. What could go wrong? Many things. You are constantly dealing with borrowers and investors who, when in a tight spot, will look for a way to make you share their pain. If you skirt the rules, then you will most likely get sued or face discipline by a regulatory authority like the Department of Real Estate, the Consumer Financial Protection Bureau and/or the Department of Business Oversight. These folks do not mess around. Discipline by these agencies results in your disciplinary record being splattered all over Google until the day you die. If you get sued, then you could drop a quick $100K or more on attorney’s fees for the first year of the case; double or triple that if the case goes to an actual trial. The bottom line is that you cannot afford to wing it or cut corners. Your survival in this business depends on getting it right, every time. It is undeniably cost effective to get comprehensive training for the high stakes business of hard money lending.
We recently defended “John,” a real estate broker who was sued by the Department of Real Estate before he retained our law firm to defend him. The DRE wanted to take his license, because his files were missing crucial disclosure forms and he did not have contracts with this loan officers. John did not seek counsel to make sure he was conducting his business in compliance with the law and was not properly trained. We were able to save his license, but it is now a “restricted license,” which means it is just hanging on by a thread.
Then there was “Jane.” The DRE claims that she used the wrong borrower disclosure form, missed several fields of information in a very important disclosure form and made a business purpose loan on what the DRE mistakenly believed to be a consumer loan. We eventually won her case, but it was too close. It cost her many times more $$$ than the cost of this course.
Engaging in the private money mortgage business without the right tools is like showing up for a gunfight armed with a water pistol. If you take our course, we will provide you with the right tools to start a hard money lending company and succeed. Prudent legal and business advice comes from experience. We have 42 years of it.
© 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. Descriptions of cases with the DRE are based on actual cases with the names changed to protect our client’s confidential information.