If you buy or sell notes in Florida, you need to jump on this: On March 1 the Florida Senate unanimously passed CS/HB 935 (it unanimously passed the House on Feb. 21), a bill that appears to require anyone who sells business loans to be licensed as a lender. Formerly, companies making business loans solely sold to Institutional investors were exempt from licensure.
Now all that the bill needs to become law is Gov. Rick Scott’s signature. If you are a Florida resident, contact him and urge him to veto it: https://www.flgov.com/contact-gov-scott/
The Florida legislature kicked off its legislative session by introducing Florida Senate Bill 894 and House Bill 935, legislation that could cover private mortgage lenders. The bills, introduced by Sen. Rene Garcia (R-Miami) and Rep. Jeanette Nunes (R-Miami), would eliminate a longstanding business purpose exemption for loans secured by a Dwelling.
On January 18, the bill passed the House Insurance and Banking Subcommittee with a 13-1 vote in favor. On January 24, the House Commerce Committee passed the bill on a unanimous vote. The Senate similarly passed the bill on a unanimous vote in the Senate Banking and Insurance committee on January 23.
An almost identical bill previously passed through the legislature in May 2017, but was ultimately vetoed by Governor Scott in June. Governor Scott issued a letter at the time stating that the regulation “would make Florida one of the most restrictive states in the nation in the residential mortgage lending arena.” It is unclear whether the new bills with their limited exemptions would sufficiently address Governor Scott’s concerns of over-regulation.
Florida has been one of the more interesting states from a mortgage licensing perspective. For example, a mortgage lender license is already necessary to make a business purpose loan secured by commercial real estate and 5-or-more unit multifamily residential property if the borrower or guarantor is an individual, or if the lender is considered a non-institutional investor.
If the bills become law, they would empower the state Office of Financial Regulation to regulate mortgage loans made for business purposes, require brokers of these loans to be licensed, and allow examination of firms offering or making private loans.
To obtain a mortgage lender license the lender must produce audited financials documenting net worth of at least $63,000. Further, any control person of the company must be fingerprinted and undergo FBI and Florida State background checks as well as provide a credit report, among other requirements. The audited financial requirement alone will have a significant chilling effect due to the prohibitive costs of hiring an accounting firm and will drastically reduce the number of lenders capable of making mortgage loans in the state.
Let Florida Governor Scott know that passing this bill will harm the residents they are trying to protect.