Hi everyone,

I got the following message yesterday from BostonAreia.
Thought everyone here should know about it.

Thanks,

Rosanna

Dear REIA Members:

The following information is extremely important!
HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at

www.regulations.gov Use the search parameter "HUD" and the keyword "safe". Please review and comment regarding the impact of this broad interpretation of the law.
"In addition to establishing HUD's responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified."

History:
As you may recall, we lobbied hard last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc... However, that law was passed subject to the Department of Housing and Urban Development's (HUD) approval of the law as "compliant" with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules. In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:
We learned about the publishing of the rules very late in the process... and the deadline for comment is upon us on February 16. However, we desperately need for thousands of REIA members across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless our members have clearly communicated that they are opposed to this portion of the rules. This is your chance to be counted on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD! We have less than one week to flood this system with comments.

Follow these simple steps:

1. Logon to www.regulations.gov You will see two white boxes for searching
2. On the left box labeled "Document Type", pull the menu down and select "proposed rules"
3. On the right box labeled "Enter keyword or ID", enter "safe mortgage". Then, press search
4. Locate the blue search result "FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ...." To read the rules, click on this title. You will be taken to another page. You will see "views". You can click on PDF file or another symbol which will show you the rule document online.
5. On the right of the screen, click on "submit comment"
6. Complete the form providing required information and your comments and then submit

What do you say?
Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own. Some ideas from others:

· bank loans are not available on some types of properties
· the tight lending climate has made bank financing "out of reach" for many
· seller financing is an "age old" tradition based on private property rights
· these rules would prohibit even partial seller financing - i.e. a "seller second"
· according to HUD's "Residential Finance Survey" in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear
· an estimated 6 million Americans own a property other than their own primary residence
· an estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties
· 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing
· approximately 5% of homes in US are for sale or for lease... seller financing may be key to liquidating this inventory


The continued success of our industry as we know it is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.

Thanks for the heads up, Rosanna. I'm over to HUD's website right now to take a look at what they are proposing. Sounds like more of "too much government"!

Doesn’t the government know what’s best for us? Even better than we do ourselves?

My understanding of the constitution states we have the right to own property and make a profit from it.
HUD THIS!!!

Umm, I looked twice and I believe I have the correct article "FR–5271–P–01 SAFE Mortgage Licensing Act: HUD Responsibilities Under the SAFE Act" and section F states specifically that seller financing is exempt from regulation.

Section F
...The commercial context implied by the taking of an ``application''
is also absent where an individual seller provides financing to a buyer
pursuant to the sale of the seller's own residence. The frequency with
which a particular seller provides financing is so limited that HUD's
view is that Congress did not intend to require such sellers to obtain
loan originator licenses. Accordingly, this rule would provide in Sec.
3400.103(e)(5) that such individuals are not subject to State licensing
requirements.....

This is the only paragraph that talks about seller financing.

What am I missing?

Stu Stanton
My Facebook page

Note the caveat "pursuant to the sale of the seller's own residence". What if you're selling a rental house?

What if HUD decides that lease-purchase contracts are disguised seller financing? Then you'd need a mortgage broker's license to conduct business because you aren't the end buyer.

OMG! I am officially red faced here. I completely missed that (my new reading glasses arrive Tuesday, for real).

Plus I just got an notification from my seller financing loan servicer friend explaining the same steps above.

People, if you read this far then take the next step and comment!

Stu