[WSBARP] Private loans

[Athena Dickerson]

Follow up question to this one, kind of related:  if a seller of a property sells the property and the buyers gets conventional financing, but seller after closing of the initial sale to buyers, decides to loan money buyers via secured by a Prom Note and DOT, do they have to follow any special rules since they are not the lender per se just financing loaned money for the buyers.  Parties are unrelated but friends.

Athena Makratzakis Dickerson
DETHLEFS SPARWASSER<https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdetsparlaw.com&c=E,1,3MignbV7JN3fDW35Ex6-X8EUG7nEGjNuKTlfq-Aje1rdb6fDs8Yt68iJDkX__xogulPxvRxqczE1jab42wQRIayCHjlfyP0fLjpZdlZRIPinoeG9OpKmAQ,,&typo=1>
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Mark Anderson
Sent: Thursday, July 14, 2022 12:39 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Private loans

One additional consideration of which I am aware is related to the minimum interest rate to be charged in a situation involving "family loans."  The minimum federal rate, also known as the "Applicable Federal Rate," sets the lowest amount of interest that must be charged on a loan.  The AFR is published by the IRS every month.  If the rate is below this, the risk exists that the IRS will consider the loan a gift and tax the transaction accordingly.

Mark B. Anderson
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Craig Gourley
Sent: 07/14/2022 12:19 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Private loans

Listmates.  I suddenly have several separate clients wanting to make private loans to refinance home loans for relatives, friends etc.  These are NOT seller financing.  These are "let me pay off your existing mortgage and you can make payments to me" cases.   I have some knowledge of Dodd Frank and the State regulations and I know that there are exceptions for seller financing.  Are there any exceptions for these non-seller financing loans secured by the borrower's personal residence?  Work arounds?  I appreciate any input. Thanks, Craig


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