As of January 1, 2013 the California Department of Real Estate will require trust deed investment brokers to obtain and review an Investor Questionnaire from all their new and active investors.

This is the result of the recent passage of Senate Bill 978

Download form 870 in MS Word here

Download form 870 in PDF format here

The important task at this point is to start mailing this form to your investors and track when they are returned.

Mortgage+Care Loan Software has added fields to the investor input screen to track when you send out form 870, when it is returned, and if you approved the investor. A report will list all investors and what stage you are in with regards to soliciting the questionnaire. When you add an investor to a loan, the distribution screen will also let you know if you have the questionnaire on file.

The rules are still unclear on what qualifies an investor. It's best to talk to your legal counsel about this.

Basically, a loan should not exceed 10% of the net worth or adjusted gross income of an investor. Loan to Values cannot exceed statutory limits, and an appraisal or broker's evaluation of value should be delivered to all investors in a new loan offering.

California statutory Loan to Value limits are
(A) Single-family residence, owner occupied .............................. 80%
(B) Single-family residence, not owner occupied ....................... 75%
(C) Commercial and income-producing properties .................... 65%
(D) Single-family residentially zoned lot or parcel or parcel ........ 65%
(E) Land that has been zoned for commercial or residential development ........ 50%
(F) Other real property ................... 35%

BUSINESS AND PROFESSIONS CODE SECTION 10237-10239.3

If you have any questions about this law change, please contact us.