We have been asked to purchase dealer paper from a long time customer and table fund the transaction. He owns mobile home lots and finances mobile homes. He wants the bank to pay him a percentage of the interest he charges on the contract and we can keep the rest of the interest (kind of like a loan particpation), for example: He charges 10% and keeps 1.5% interest and the bank gets 8.50% interest for booking it. He wants the interest paid up front and then if the customer pays off early, he will refund it back. There would be no disclosure on the note to show how he was paid.

Would he be a mortgage loan origianator and can this be done??
Thanks

His name is on the contracts???

yes it would be.

If these are loans and lots, then the transaction are fully covered under Regulation Z and RESPA. Sounds like you are just buying the loans from him, there is no participation. I would be doing significant compliance due diligence on a sample of loans before engaging my legal counsel in working on the purchase agreement.

Yes I agree with you, but still wondered if you felt he is mortgage loan originator in this type of situation.

IMHO - He is going to be a loan originator under Regulation Z and most likely is required to be registered at the State level under the SAFE Act.