Direct lending companies use their own funds to pay for mortgage loans to borrowers. But unlike mortgage brokerage companies that broker a loan to other lenders, a direct lender can close a mortgage in a borrower?s name, provide advance funds, or make a commitment to advance funds to an applicant to pay off mortgage. Once the mortgage is paid off, the direct lender can service the loan or recoup its investment by selling the mortgage to another investor for profit.
When you?re looking to start a direct lending company, you must know the requirements for a lender license in the state where you will be doing your business. In Florida, a new lending company has to complete Form MU1 under the National Mortgage Licensing System and submit it to the Florida Office of Financial Regulation. The company is also asked to pay $500 application fee, and $100 guaranty fund fee. The federal agency will conduct an FBI background check on all the principal owners of the lending company.
The lending company must submit audited financial statement for the most recent fiscal year. The audited financial statement must show a net worth of at least $63,000.
Once the lending company gets the approval from the state and all the required licenses, it can start advertising to bring in customers. Ads can be placed in newspapers and it should show the mortgage interest rates as well as the programs offered.
You should also make a web site that features an application page where customers can apply for loans online. Be sure to post your prevailing interest rates on consumer finance sites.
Each state has its own requirements on how to maintain records of lending transactions. Direct lenders must have transaction logs that have every details of transaction that occurs. It should state whether the applicant is funded or not.
Source: http://www.paydayloansmag.com/turning-into-direct-lender-or-lending-company/
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