One Less Hurdle for Parents Making Mortgage Loans to Kids
Making a residential mortgage loan to a family member can be a win-win, and a recent change in Colorado law makes it a little easier for parents to make such a loan to their children.
Since 2009, almost anyone who offered a residential mortgage loan had to have a state-issued mortgage loan originator’s license or had to work through a licensed professional. Now, parents making mortgage loans to children are exempt from this requirement.
The exemption does not cover loans to other family members. Also, lenders must still navigate other federal and state laws: the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Colorado Consumer Protection Act, and more. Federal laws and regulations in particular have been in flux since the crash of 2008, and failure to comply can result in uncollectable loans and even civil penalties.
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Making a residential mortgage loan to a family member can be a win-win, and a recent change in Colorado law makes it a little easier for parents to make such a loan to their children.
Since 2009, almost anyone who offered a residential mortgage loan had to have a state-issued mortgage loan originator’s license or had to work through a licensed professional. Now, parents making mortgage loans to children are exempt from this requirement.
The exemption does not cover loans to other family…
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