Some states in the U.S. have licensing requirements for brokering a private mortgage secured by investment property, aka hard money loans. A few states are more strict in that a broker must have a broker license regardless of whether the loan is a business-purpose loan versus a consumer-purpose mortgage. Private Lender Link’s CEO, Rocky Butani visited Geraci Law Firm’s office in July 2023 to interview Dennis Baranowski, Esq. to learn which states require a license to broker loans. Watch the video or read the transcript below.
Let’s just say I’m a broker and I’m in California. Actually, I am a broker in California (CA DRE Broker Lic. 01893537), but I don’t originate loans. So let’s say I did. Most of my deals are in California and I want to start brokering deals in other states. What are some of the states that I should avoid if I don’t want to have to get a license in other states?
Generally speaking, in the states that require the lenders to be licensed, you’re going to have to have a broker’s license as well, and there’s not going to be the same exception for brokering a loan in those states. So, like in California, you can’t broker a loan in California without a license. There is really no exception to that rule. You go into Nevada, it’s the same thing. You go into Oregon, same thing. You go into Washington, it’s the same thing.
But yeah, the general rule is if you’re required to have a license in a given state to lend, you’re going to also need it to broker a loan. And then there’s also a handful of states that actually expand it, where you would also just need it to broker. I believe that Wisconsin may be another one, and Michigan. So there’s a few that are going to add that licensing requirement for the broker that may not be required for the lender because there is no exception like you would have for a lender, where you have somebody that’s licensed by that state and is regulated by that state. The state wants to hold somebody accountable.
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