Your assumption is incorrect. Loans between private parties are limited by CA usury laws. The maximum rate is 10% per annum. If you want more interest, you would need the loan to be brokered by a real estate broker.
I urge you to: 1) open a loan escrow; 2) obtain a title policy insuring your interest; 3) conduct due diligence regarding the security of your investment and the ability of the family member to repay the loan.
Loans secured by 2nd deeds of trust are VERY risky. Should the 1st foreclose, your security will be entirely wiped out. Unless you have sufficient financial resources to protect your investment in the event of default on the 1st, and are a sophisticated investor (which it appears you are not), I would not make the loan if you expect to be paid back. Good luck.
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Follow Mr. Daymude's advice. It is right on.
Usury laws generally not apply to 'regular' financial institutions.
Consult a lawyer before you do anything. Avvo advice is not enough!!!
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