IMAGINE THIS…

Your borrower is nearing maturity.
They’re struggling financially, and you want to help.
You agree to extend their loan term, lower the interest rate from 12% to 10.25%, and even waive thousands of dollars in late fees and penalties.

You draft the agreement, thinking:
“I’m a hell of a great guy — I helped them out.”

Wrong.

You just violated California’s strict usury laws.

Without a licensed real estate broker involved, your loan loses its usury exemption.
Even if you lowered the rate — if the resulting APR exceeds 10%, you’ve crossed the line.

Now, here’s what’s at risk:

• Your loan could be declared void and unenforceable.
• You could be ordered to refund all interest collected.
• You could face lawsuits, damages, and the borrower’s attorney’s fees.

All because you tried to help.

Why Licensing Matters — Even When “Helping”

In hard money lending, usury exemptions aren’t automatic —
they’re tied to who originated the loan and how.

If a licensed real estate broker arranged the loan, it qualifies for exemptions.
But if you, as an unlicensed lender, modify it without broker involvement, you sever those protections.

That “favor” you thought you were doing?
It could become a six-figure mistake — or worse.

Navigating Treacherous Waters Without a Map

Private lending isn’t just about offering capital —
it’s about understanding (and respecting) a maze of legal currents beneath the surface.

In this world, good intentions don’t protect you.
Experience does.

When your money, reputation, and legal standing are at risk, you need more than a good heart —
you need a team whose best practices were forged by decades of navigating the hardest storms in private lending.

Stay protected. Stay informed. Stay strong.

Follow me for more insight.

Cheers,