![]() ![]() Under Article XV, section 1 of the California Constitution, the maximum rate a lender can charge on nonpersonal loans is “the higher of 10 percent or 5 percent plus the Federal Reserve Bank of San Francisco’s rate on the 25 th day of the month preceding the date the agreement was contracted.” The exception is if the loan is arranged by a licensed broker and if the loan is secured by real property (personal property loans are governed differently). This is essentially the equivalent of a get-out-of-jail-free card for the borrowers, because the borrowers now have the defense that the loan was usurious. JWA then applied for a license from the DRE…and the DRE filed an accusation (disciplinary proceeding) against Jim Ward and revoked Ward’s license and denied JWA’s application. The DRE eventually figured out the screw up and audited JWA (the new company), the DRE auditor told JWA’s attorney that JWA was not licensed on October 1, 2003, just one week before JWA closed the loan to Creative Ventures, LLC. The DRE issued one for the non-existent company. Ward requested a renewal of the license for JWA, Inc., the old company, not the new company. ![]() Ward decided to restart his company and in 2000, a new JWA entity was formed. started out in the 90’s, it appeared to have a corporate license, but that company was merged out of existence in 1997. Ward individually carried a broker’s license. You have to wonder how something so small can be so difficult to do right. Turns out, JWA did not have a California broker’s license. The Promissory Note stated that “The loan evidenced by this Note has been arranged by a real estate broker licensed under the laws of the State of California.” ![]() Ward brokered the loans for the project, charging 12% interest for the loan, as well taking a broker’s fee of 6%. One of the developers, Creative Ventures, LLC entered into a construction deal with Jim Ward & Associates (referred to in the Court decision as “JWA”) in October of 2003, and borrowed $2M to build Buckmeadow, a residential property in Menlo Park. Ward held himself out as a private money arranger and brokered a number of loans with local private investors and to local builder/developers. Jim Ward & Associates (sometimes referred to as “JSW”) was a local business based in Mountain View. In a stunningly horrific recent case against private investors, the California Court of Appeals punishes investors on a multi-lender Note, rewards a borrower in default and allows the true bad actor (the mortgage loan originator) to walk away. ![]()
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