Protect yourself
Finding and using your state regulator
Whether private lending requires a licence depends on your state and on the purpose of the loan. Here is how to find the authoritative answer for your specific situation.
"Do you need a licence to be a hard money lender?" is one of the most frequently asked and most confidently mis-answered questions in this category. The genuine answer is that it depends on three things at once:
- The state where the property sits - not where you live, and not where the lender is based.
- Whether the loan is business purpose or consumer purpose - the single biggest fork. Business-purpose loans against investment property are exempt from much consumer mortgage licensing in many states; loans secured by a borrower's residence generally are not.
- Whether a broker is involved - brokering is separately licensed in many states even where lending is not.
Tool 1: NMLS Consumer Access
NMLS Consumer Access is the public face of the Nationwide Multistate Licensing System, used by state regulators across all fifty states. Search by company name, by individual, or by licence number.
- It shows every state licence an entity holds, the licence numbers, the status, and any regulatory or disciplinary action.
- Absence is not proof of a problem. A genuine private lender making only business-purpose loans in an exempt state may legitimately not appear.
- But a mismatch is decisive. A lender who tells you they are licensed in your state, and is not there, has told you what you need to know.
- It is also the fastest way to detect impersonation: search the name you were given and see whether the real company's details match the ones in your emails.
Tool 2: your state's financial regulator
Every state has one, though the name varies - Department of Financial Institutions, Department of Financial Protection and Innovation, Division of Banking, Office of Financial Regulation, Department of Financial Services, and others. The Conference of State Bank Supervisors maintains the authoritative directory at csbs.org/state-bank-directory.
Two things they will do for you, free:
- Tell you whether the activity being proposed requires a licence in that state, for that loan purpose.
- Tell you whether a specific entity holds one, and take a complaint if something has gone wrong.
Tool 3: the Secretary of State
Every state publishes a free business entity search. Confirm the lending entity exists, is in good standing, and was registered when the lender implies it was. A firm claiming fifteen years of history whose entity was formed last spring is telling you something.
Tool 4: the county recorder
The most under-used check available. Private lenders record deeds of trust and mortgages in the county where the property sits, and most county recorders now offer a free online index searchable by grantee name.
Where to complain
- Your state financial regulator, via the CSBS directory above.
- The regulator in the state where the lender claims to operate, if different.
- The Consumer Financial Protection Bureau, if the loan is consumer purpose.
- The FTC at ReportFraud.ftc.gov.
- The FBI's Internet Crime Complaint Center at IC3.gov, for anything involving wire fraud.
Questions people actually ask
Do you need a license to be a hard money lender?
It depends entirely on the state and on the purpose of the loan, and this is one of the most commonly misstated facts in the whole vertical. Broadly: business-purpose loans secured by investment property are exempt from most consumer mortgage licensing in many states, while several states license this activity regardless of purpose, and a loan secured by a borrower's own home is a different regulatory animal almost everywhere.
We are not going to publish a fifty-state answer we have not verified state by state - that research is underway and will be published with citations. In the meantime, the reliable move is to check the specific entity on NMLS Consumer Access and ask the state regulator directly. Here is how.
What are the requirements for a hard money lender?
As a matter of law, whatever the state where the property sits requires - which varies from nothing beyond ordinary business registration to full mortgage lender licensing with bonding and examination. As a matter of practice, a legitimate lender will have a registered entity, a real address, named principals, a track record you can verify, and no objection to you checking any of it.
Which states require a license for commercial lending?
Commercial and business-purpose lending licensing is genuinely inconsistent across states, and the answer also turns on whether the loan is secured by a dwelling, who the borrower is, and whether a broker is involved. Rather than guess, verify the entity on NMLS and contact the state regulator - our state regulators guide shows the process.