Have you heard about this?

13 years ago

Looks like the end of seller-financing. Look over the various provisions. Reduced business activity will reduce money for the US Treasury.

Here is a link that might be useful: Click here

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Comments (12)

clemrick
13 years ago
I don't see anything addressing seller financing on that page. It is all about licensing mortgage professionals.
bus_driver
Original Author
13 years ago
Obviously little time was spent reading the material at the links within the website. Seller financing constitutes originating a mortgage.

Here is a link that might be useful: one such link
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brickeyee
13 years ago
It is gong to hinge on the legal definition of "mortgage loan originators" at the state level.

Only "Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered.All other mortgage loan originators are licensed by the states."

The states do not license individuals writing owner financing at this point, and they are not likely to require such licensing since the person is not 'engaged in the business.'

Just because you do something once (or even twice) does not mean you are 'in business,' a usual requirement for licensing.

We will have to wait for the regulations to be issued and see EXACTLY how they are worded.

Regulations are also subject to a public comment period, though without an organized group making a significant number of comments input is often ignored.
bus_driver
Original Author
13 years ago
I did not find any ambiguity in these statements. Some sites state the penalty for violation as being $25,000.
Copy and paste:
o All residential mortgage loan originators must be either state-licensed or federally registered.
ô

ô
All other mortgage loan originators, without exception, must be state licensed.
o
brickeyee
13 years ago
"I did not find any ambiguity in these statements."

How does the code (law) define "mortgage loan originators"?
bus_driver
Original Author
13 years ago
Copy and paste from the link:
(6) MORTGAGE LOAN ORIGINATORÂ
(a) IN GENERALÂThe term ÂÂmortgage loan originatorÂÂÂ
(i) Means an individual who for compensation or gain or in the expectation of compensation or gainÂ
(A) Takes a residential mortgage loan application; or
(B) Offers or negotiates terms of a residential mortgage loan;
brickeyee
13 years ago
Now you are going to have to go the the Congressional Record and determine what the words used in the debate about the bill were.

This is the same thing the regulators that will do, so waiting for the regulations to be issued to find what view they plan on taking is likely the best option.

If all the references about the bill are to commercial activity (loan brokers, commercial lenders, etc.) then a seller offering financing is unlikely to fall into the groups.

"individual who for compensation or gain or in the expectation of compensation or gain"

This is the phrase that is VERY likely to make the law NOT apply to seller financing.

Offering seller financing is NOT for "compensation."

You would receive nothing outside of the stated loan payments.
dave_donhoff
13 years ago
Brickeye,
Don't see how you can construe teh act of securing a sale NOT a "gain" for a seller (even if they are selling at no profit... ceasing their current obligations in itself is a gain.)

This law has already *officially* made seller financing illegal in WA state*, though so far the state has opted to leave it unenforced (kind of like our nation's immigration laws anymore.)

(*According to the WA State Department of Financial Institutions' response to a private inquiry from a real estate investor I know who wants to sell via carrying his own paper.)

Business is officially a "state enemy" all the way down to the littlest of little guys now. Housing is going a whole lot of nowhere until this trend reverses.

Cheers,
Dave Donhoff
Leverage Planner
creek_side
13 years ago
Seller finances mortgages are not covered.

From the model law, clearly stated:

(3) EXEMPTION FROM THIS ACTÂThe following are exempt from this Act:

(a) Registered Mortgage Loan Originators, when acting for an entity described in MSL XX.XXX.030(10)(a)(i),(ii) or (iii) are exempt from this Act.
(b) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
(c) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individualÂs residence.
(d) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorneyÂs representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator.

Underlining added.
bus_driver
Original Author
13 years ago
It does not exempt individuals who sell property they do/did not use as their personal residence.

So the first line "Seller finances mortgages are not covered." is not true in every circumstance.
creek_side
13 years ago
No, but most seller financing is by occupant owners and/or their relatives, who are also exempt, and that has been the main thrust of this thread.

Any individual who buys a house for the purpose of resale is in the game as a business and would not be exempt in any case.

The statement All other mortgage loan originators, without exception, must be state licensed. is incorrect. The model law sees sellers who offer financing as loan originators, but then exempts most of them from its provisions. In other words, though they may technically be loan originators in the legal sense, the are not required to be licensed.

Bottom line: Assuming a state adopts the model law, seller financing will not be affected in most cases.

Rental owners and flippers, if they still exist, will be affected, although it wouldn't surprise me to see most states also exempt the rental owners.
brickeyee
13 years ago
Just because a particular circumstance is NOT listed as exempt does NOT mean the law applies.

"individual who for compensation or gain or in the expectation of compensation or gain" is referring to the loan origination process, not the underlying sale of the property.

Unless you charge a 'loan origination fee' you are not profiting from the loan making process itself like a bank does, the folks the law is aimed at.

"Don't see how you can construe teh act of securing a sale NOT a "gain" for a seller (even if they are selling at no profit... ceasing their current obligations in itself is a gain.)"

That is an IRS only viewpoint, and specific to taxes and income.
If "securing a sale" is covered all sales are regulated, and that is obviously NOT the intent of the law.

"*According to the WA State Department of Financial Institutions' response to a private inquiry from a real estate investor I know who wants to sell via carrying his own paper."

Relying on the governments attorneys for a legal opinion has no standing in court.
It is the same as an Attorney General issuing an opinion.
It is not binding, and cannot be used as a defense in court.

If you want advice that is useful pay your attorney.

Government likes regulation.

Have you heard about this?

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