PRIVATE LENDING (HARD-MONEY LENDING)

  • A private or hard-money loan is a loan from a private or non-traditional lender. The asset being purchased, typically real property, is used as the collateral for the loan. 

  • In New Mexico, there are certain circumstances under which a private lender must be a Mortgage Loan Originator. P an individual who for compensation or gain or in the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. A “residential mortgage loan" is defined as any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or on residential real estate upon which is constructed or is intended to be constructed a dwelling as so defined. The following are exempt from the provisions of the Act: 

    •  registered mortgage loan originators when acting for an entity defined in the Act;

    • an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual;

    • an individual who offers or negotiates terms of a real property sale financed in whole or in part by the seller and secured by the seller's real property (this is seller financing); or

    • a licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage loan company or other mortgage loan originator or by any agent of such lender, mortgage loan company or other mortgage loan originator.