Legal Question in Real Estate Law in California

Nothing prohibits it, but there are a number of rules you must follow for short term ballon payment loans. As you can imagine, such loans have been the source of predatory loan practices, and so they are now regulated.

One of the rules is that you would need to give the borrower 90 days written notice before the due date of the loan, which means it would need to be sent almost immediately after the funding. Another issue is regarding the condition of his present loan, if there is one. Is he in a foreclosure situation where a Notice of Default has been filed. What will you be charging in interest ... is it in excess of the Usury Law. You need some legal advice before making such a loan.

I agree. Usury laws generally kick in at around 10% annual simple interest, and a borrower's remedy for usury is treble the total interest collected as damages. Bear in mind that there are exemptions from the usury laws for lenders with certain credentials, such as being a national bank or a licensed real-estate broker, but these exemptions don't apply to the average person, so an unlicensed lender often cannot do what he or she sees others doing in the loan market.