Loans, particularly those involving real estate, are among the most highly regulated type of transactions under California law. The California Department of Consumer Affairs publishes a “short” primer on what must be done by the lender, the loan servicer, and the borrower in order to ensure that a loan is in compliance with the law. The last five pages of that primer are a checklist of over 100 specific, and often arcane, requirements that must be met. Not all of these requirements apply to each type of loan transactions, but unless the lender is itself a Loan Servicing Company with years of experience in handling these sorts of transactions, it would be almost impossible to stay on top of California’s requirements.
A qualified Loan Servicing Company knows which rules apply to which type of loans, and will work to make sure that your investment remains legal and in compliance with the regulations promulgated by the Departments of Real Estate and Consumer Affairs. A qualified Loan Servicing Company will also make sure all provisions of the California Business and Professions Code are followed, as well as any additional pertinent regulations. Private loans are advantageous investments insofar as they yield high returns. However, the benefits of those high returns are substantially diminished if the lender is forced to spend all her/his time servicing the loan when the lender could be focusing on other projects. Additionally, these loans do carry risk. Having a knowledgeable Loan Servicing Company to ensure lender and and borrower compliance can substantially reduce that risk.