Chapter 5 - Legal Issues for Investors

When you invest in a trust deed there are certain legal issues that you need to consider. Regardless if you secure your trust deed investment through a single lender (whole) or by more than one lender (fractionalized), you will still need to follow certain rules and regulations as stated by real estate law.

Real Estate Law


The Real Estate Law includes what is commonly referred to as the multi-lender law. This multi-lender law has certain restrictions which it can impose on the investor. Some of these laws include, but are not limited to the following:

? The investor must have their loan serviced by a mortgage loan broker (MLB) and have a written agreement. Furthermore, the investor and the MLB need to arrange for a third party to take part in loan servicing. The third party should be a qualified, licensed real estate broker.

? A loan can have no more than 10 note holders or lenders.

? The investor is not permitted to invest more than 10% of their annual income or net worth

? Based on the type of property that is considered collateral, defined loan-to-value ratios are not to be exceeded

? Only under limited circumstances is the MLB allowed to self-deal.

? The investors loan is not permitted to be indirectly secured though any other deed of trust or promissory note, and is only secured directly through the property.


TILA - Section 32


Aside from the Real Estate Law, you may find that your loan documents will feature another legal document known as the federal Truth-in-Lending Act (TILA). The TILA was amended in 1994 and was created in respect to loans that are secured by a borrowers principal property. The rules of the TILA affect all mortgage transactions that are described as having fees or rates that are above a specific amount or percentage. Such mortgage transactions are known as high rate/high fee or Section 32 loans.

A loan that is considered to be high rate is one where the appraisal exceeds ten points on the Treasury Security yield that has similar development. A high fee loan, on the other hand, is one where the total fees and points are greater than 8% of the total loan amount. If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them.

As you can see there are many legal issues for investors to consider before they invest in a deed of trust. Make sure you understand all legalities concerning trust deeds before you make your investment.

Trust Deed Lending

The funds for these short term loans that are provided by Coppercrest Funding, come from a variety of sources that include, but are not limited to, individual investors, hedge funds, pension plans, trusts, IRAs, and REITs.

The documents can be sent to the unavailable party ahead of time and pre-signed. 00 in her IRA at 2. The reason is because if you use your Pension Plan or IRA, your income is tax deferred and can increase faster, as you will not have to pay taxes so you will have more money for gaining interest. A loan that is considered to be high rate is one where the appraisal exceeds ten points on the Treasury Security yield that has similar development. ) _ Receivership or Foreclosure _ Property held in Trusts, Probate, etc.

Although, in some cases, depending on the state, sometimes the issue of a lost note can be resolved by means of a lost note affidavit.
What is private money lending? Tap the equal button 20 times in order to compound the 20 years. A few interesting facts about liens It is important for you to know that liens in first priority are the most ideal. Dont forget, the more you learn about trust deed investments, the safer the risk and the higher the potential for excellent return. This allows them the ability to approve and fund loans within hours or days of a submitted application. 00 annual retirement income to James at 10%.

Thus, this will ensure that the investor has the escrow number, the name of the escrow company, as well as the name of the individual responsible for the documentation.
Once the payment has been received in full, and the funds are cleared, the loan servicing officer will then begin to issue the appropriate checks to the investor(s) involved in the loan. The third party should be a qualified, licensed real estate broker. To be on the safe side, it is always in your best interest to ask whether or not a construction control company is used. _ A is supported by conglomerate properties and equipment that are often from foreign countries (ex.