Manny AlvarezLegal & Biz Advisor to Entrepreneurs & Startups
Bio

Legal and business advisor to entrepreneurs and small businesses. Particular expertise in consumer finance, banking, real estate, and start-ups. Ex-Affirm (first GC), DFPI (former California banking commissioner), Cal AGO, CFPB.


Recent Answers


Probably, but it depends on the state(s) in which your customers are located. Travel agent licensure/authorization in the US is governed by state law. In California, for example, the California Attorney General's Office administers the Seller of Travel Program: https://oag.ca.gov/travel

Start by figuring out where your customers are located, then you can research each state's law. Here's a starting point: http://travellaw.com/page/travel-law-faq


The biggest pro in separating personal from business savings is establishing clear evidence of separateness, which is an important presumption with LLCs or other types of business entities. As a refresher, one big reason entrepreneurs form LLCs is to limit their liability to their business investment. If you have an LLC but don't open a separate business account for that entity, then it's really hard to say with a straight face that you're operating as a separate business entity.

By contrast, there really aren't many cons to establishing a separate business account. I suppose you could consider "hassle" a con, but that's likely greatly outweighed by the benefits.


S-Corps often have only one shareholder. If you're not going to have many ties with IL going forward, and if most of your ties will be with CA, I'd dissolve the IL entity and form anew in CA. That way you avoid the hassle of double annual filings and double state taxes. Note: you'd likely still need to maintain foreign registrations if you plan to "do business" in other states. Just be aware that "doing business" means different things in different states. Please retain counsel if you have any doubt or questions.


These are challenging questions to answer at a high-level because the mortgage industry is hyper-local. This means that the customer acquisition channels, service providers, etc., will all be different.

That said, here's how I'd think about it the ~$8 trillion industry at a high level:

- customer acquisition: how are you going to do this in a scalable, affordable manner? I'd imagine you want some combination of cost-effective online advertising with surgical direct mailings. Partnering with other service providers (RE agents, etc.), while potentially effective, carries compliance risks. In sum, RESPA prohibits joint marketing efforts in sometimes counterintuitive ways.

- funding sources and cost of credit: where are you going to get money to lend? Assuming you want to lend directly, imagine you want to start with a warehouse line of credit. That's a process in and of itself. And, assuming you don't want to carry loans on your balance sheet, you'll need to figure out how to engage capital markets for either whole loan sales or securitizations.

- underwriting: are you doing plain-vanilla qualified mortgages? If so, you're looking at a lot of competition. Want to underwrite outside the box? Size up that opportunity first because there's considerable countervailing credit risk.

- servicing: this is HARD. It's what's got lots of banks in trouble because their servicing efforts were lack-laster. So are you going to outsource it or take on the headache of building out yourself?

- legal/compliance: NOT insignificant. Several new rules came out of 2010, so you want to understand those rules in addition to pre-existing rules like TILA, RESPA, and state-based laws. Again, depends on where you're going to offer your services. States and federal regulators are not going to ignore mortgage originations or servicing anytime soon.

I spent almost six years working on mortgage matters, first with the California Attorney General's Office, then with the Consumer Financial Protection Bureau. Now I'm in-house and see the business issues firsthand.

Happy to speak more by phone.


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