State Licensing Risks Every Private Lender Should Understand | The Elite Officer

Private lenders often operate under a practical and widely shared assumption: if a loan is business purpose, short term, and made to a real estate investor, state licensing laws should not apply.

In some cases, that assumption is correct. In many others, it is not.

Unlike the consumer mortgage space, private lending sits in a patchwork of state laws that draw lines based on property type, borrower profile, frequency of lending, and even post-closing activities such as servicing or loan modifications. Because of that variability, lenders can unknowingly cross into licensable activity simply by expanding into a new state, slightly changing a loan product, or increasing origination volume.

About the author

Jennifer Young, Esq.

Partner at Fortra Law

Jennifer Young is a Partner and Attorney on the Corporate & Securities team at Fortra Law, specializing in real estate-focused private placements and alternative investments for private lenders, developers, and entrepreneurs. She also leads the firm's licensing practice and is a founding member of the Women in Private Lending, supporting mentorship, education, and professional development to advance women in private lending and real estate finance.