When it’s time to prepare loan documents for a client, private money lenders need to understand the process and requirements they need to follow, whether they are having a law firm prepare the documents or if they are using software to generate the documents. Private Lender Link’s CEO, Rocky Butani visited Geraci Law Firm’s office in July 2023 to interview Dennis Baranowski, Esq. on what their process is when preparing loan docs for their clients. Watch the video or read the transcript below.
ROCKY BUTANI:
Once I figure out the compliance, there’s these entity potential issues and title issues, then we have loan docs, your firm handles all that, right? You already have loan doc sets for every state, so I don’t have to worry about that. It’s just a matter of whether I’m ready to lend in that state and actually doing loans there.
DENNIS BARANOWSKI:
Exactly. and I’ll back up a little bit of the process too. And so you’ve kind of outlined it already. We have a client or a potential client that contacts us and says, Hey we’d like to make a loan in X state or we wanna start lending in these states. We start talking through and figuring out, okay well, is the state actually desirable? Does it fit within your requirements? Again, it could be their investors, it also could be something in capital markets where maybe the loan terms and what they want to offer and what’s required from their loan buyers is not really going to be something that conforms to what those requirements are from those loan buyers. So you go into the state, we figure out, okay, yes, let’s do it. Then we determine, do you need to get licensed? And if not, are there licensing requirements still? But you fall under exception. How do we make sure that all your loans fall on that exception? And we draw out that map of considerations of what to do. And then you go, okay well, I’m gonna start soliciting loans, or I’m gonna start working with third party originators in that state and I’ll let them bring the loans to us. You know, we’ll do the wholesale lending. We don’t necessarily want to have brick and mortar deal directly with the individual borrower to solicit them, but we also would like to be able to have some business there. They start working with brokers in that state and they get their loans and then they’ll come to us and they’ll say, all right, we wanna get started. What do we need to do? And so we have a questionnaire that the client submits to us that provides basic information about the parties, addresses.
We also get the entity documents so we can review those and perform the review that I was just talking about for the due diligence as well as the title policy. And then we make sure that the title policy is going to be in conformance with what our client needs as well. And then we move forward and we’ll draft the documents.
Our documents, we’ve worked long and hard on these for 10 plus years in really trying to hone what we have. And we work with the local council in each state to ensure that they’re compliant. And we update them constantly to ensure that they continue to be compliant with whatever disclosures are required by a given state or terminology. Because some states even have different granting clauses in the security instrument. So the deed of trust may have words that read this way but another from state to state that can vary. And so we’ve taken the time and like I said, I’ve worked with local council in each state as well to ensure that the documents that we create for our clients are all compliant with those state requirements. And then adding the disclosures and other things. And so we draft up the documents and typically if we have everything we need, we can turn them around within a day or two and then we send them out. And then if the client wants help closing the loan, we help them close the loan. Or if they feel comfortable closing it on their own, then they can also do that as well.