A
real estate broker may arrange:
•
a loan secured by real property;
• the sale
of a loan secured by real property;
• a loan
secured by a loan (the collateralized loan) which is secured
by real property; or
• the sale of a loan secured
by a collateralized loan.
A loan or sale of a promissory note (other than when
collateralized) may have multiple lenders or purchasers,
and be governed by special multi-lender laws.
In a single-lender or purchaser loan transaction, the
broker must give the lender or purchaser a Lender/Purchaser
Disclosure Statement, unless exempt by statute. Because
of the statute’s many institutional and defined
licensed lender exemptions, this disclosure obligation
is owed primarily to private parties and most Employees’
Retirement Income Security Act (ERISA) regulated and
non-regulated pension plans.
Basically, the disclosures contained in the
Lender/Purchaser Disclosure Statement must include:
1. material terms of the loan;
2. status of all existing loans/liens against the securing
property;
Note: A broker shall also provide to the prospective
lender the option to apply to purchase a title insurance
policy or an endorsement to an existing title insurance
policy covering the securing property, and a copy of
a written loan application, and a credit report.
3. information about the securing property:
• address, assessor’s parcel number, and,
if available, the legal description;
• age, size, and type of construction of any improvements;
• an estimate of fair market value as determined
by an appraisal, a copy of which shall be provided to
the lender;
Note: A lender may waive the requirement of an independent
appraisal in writing, on a case-by-case basis, in which
case the real estate broker shall provide the broker’s
written estimated fair market value of the securing
property, which shall include the objective data upon
which the broker’s estimate is based.
• existing and expected or anticipated encumbrances
and the investor’s protective equity (the difference
between the market value of the property and the total
senior indebtedness plus the subject loan);
4. pertinent data about the borrower, including identity,
occupation, employment, income and credit, as represented
to the broker by the borrower; or, in the sale of a
loan, similar information about the ability of the trustor
to meet the contractual obligations under the note or
contract, including payment history;
5. loan servicing arrangements or lack thereof;
6. the broker’s capacity in the transaction as
an agent or principal (a broker may initially hold himself/herself
out as arranging a loan but ultimately declare that
he/she is the borrower); and,
7. if the broker will directly or indirectly obtain
the use or benefit of some or all of the funds other
than for commissions, fees, costs, and expenses for
services as an agent, a detailed statement of the intended
use and disposition of the funds, including an explanation
of the nature of the benefit to the broker.
The lender/purchaser must receive the statement before
becoming obligated to complete the transaction. The
broker must also deliver the statement to the Department
of Real Estate (DRE) in advance of accepting loan funds
if the broker will directly or indirectly obtain the
use or benefit of the funds.
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