26 Jul **Newsflash** New Seller Financing Rules (Safe Act) NOT a Problem for Land Investors
I have an important update for all Real Estate Investors who want to continue making money. Watch it here and after you watch it please leave me a comment.
I have been bombarded with questions about the new SAFE ACT which was issued by the George W. Busch Government and is supposed to regulate how and when a seller can do a Seller Financing deal.
As you guys know I am selling about 60-70% of all my properties with seller financing and you are probably too as a Land investor using my www.LandProfitGenerator.com and www.LandProfitFormula.com programs.
So this has relevance and could possibly make doing business as a Land Flipper much more difficult.
So I hired a Real Estate Attorney to look into this for me and also my CPA and both came up with the same result (and I also checked it out).
Now I am NOT an attorney and don’t even play one on Television so you have to still do your own research and this is not meant to be legal advise.
But according to all I have heard and researched and what my attorney told me if you are a Land Investor I have GOOD news.
It is our clear conclusion that the new HUD SAFE Act is a Non-Issue for Land Investors because LAND is excluded from the kinds of real estate affected by this new Rule.
According to the HUD which put this new federal law on the books each state has until about 7/31/2010 to implement some kind of a regulation that controls the use of Seller Financing in Real Estate Transactions. Basically HUD put up a Sample Guideline rule and suggests that the states follow it or create something that is at least as strict as that one.
You can read the entire thing here: http://www.hud.gov/offices/hsg/ramh/safe/smlicact.cfm
And basically it says that if you do Seller Financing you can only do it if you either ARE a Financial Mortgage Broker or if you Work Through a Financial Mortgage Broker.
BUT, the HUD definition and so far also all the State Rules I have seen are very clear in what they actually include in this Definition of Real Estate, and actually they use the word “Dwelling” and under item C. of the Guideline they accept and cross reference the Definition of “Dwelling from regulation Z which reads:
“Regulation Z, which implements TILA, defines dwelling to mean “a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.” (12 CFR 226.2(a)(19).) Since both the SAFE Act and TILA address consumer protections for borrowers in housing finance transactions, HUD finds that the same interpretation applies under the SAFE Act. In addition, HUD interprets “mobile home” to include a manufactured home, as defined in the National Manufactured Housing Construction and Safety Standards Act of 1974. (42 U.S.C. 5402(6).)
The HUD SAFE act that everyone is panicking about is actually a NON-ISSUE for us Land Investors. If you buy and sell land using the www.LandProfitGenerator.com techniques you should NOT be affected by this rule at all and can continue business as is.
Hope that was worth spending a few minutes reading this.
More updates will follow soon.
Now as always, go out there and get deals done.
To your Success,
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Renee RikerPosted at 10:15h, 26 July
This is GREAT news Jack! Thanks for sharing this valuable information with your land for pennies family. It has been renting some space in my brain and it’s nice to now free that space up Ü
SethPosted at 10:45h, 26 July
That’s great news, thanks for the update Jack!
Warren BowlesPosted at 11:07h, 26 July
The most important and critical element of the SAFE Act is the definition of “Loan Originator”
B. Definition of Loan Originator
Section 1503(3)(A)(i) of the SAFE Act defines “loan originator” as “an individual who (I) takes a residential mortgage loan application; and (II) offers or negotiates terms of a residential mortgage loan for compensation or gain.”
Specifically excluded from this definition are: an individual offering seller financing on his own residence, and an individual negotiating or assisting a family member with a residential mortgage. An owner offering seller financing on vacant land would similarly be excluded from the definition of “Loan Originator”.
Larry TutinoPosted at 15:30h, 26 July
I am getting ready to write a deal to purchase a small Mfrd Home Park. The Seller has agreed to carry a 2nd position Note for approx. $80,000.
I appreciate that you are researching the laws and providing “expert advise ” to us. I will keep this in mind as we structure the deal.
Greatly appreciated, Larry Tutino
Mt Rainier Properties LLC
TomPosted at 16:33h, 26 July
This is a non issue. If the individual, which means a natural person, takes a mortgage app without compensation, there is no conflict. If the individual is taking the app on behalf of a separate legal entity which will receive the compensation or gain, the law will not apply.
Also your argument about the definition of dwelling is also wrong. The model law states that residential real estate includes that upon which a dwelling is constucted or INTENDTED to be constructed.
Also it would seem that if the individual was on fixed compensation, with no additional compensation/gain potential for taking an application, this would render this law moot.
As usual, there are probably a dozen ways around it if need be
Robert MarronPosted at 20:52h, 26 July
Jack – Thanks for the information. Is there anything on the horizon as far as California and what they might be doing before 7/31? I am always leery of this state as they sometimes get a little toooooo creative in their law making and writing. Thye may try and exceed what HUD has done. Later-Bob
angiePosted at 12:59h, 27 July
THANKS FOR THE UPDATE ON SELLER FINANCING… I am a NOTE FINDER of “carry back” seller financed notes. I’m thrilled about this. I am also happy to learn more about LAND and TAX liens!
ATTENTION SELLER FINANCERS… PLEASE VISIT MY WEBSITE FOR A FREE CASH OUT EVALUATION OF YOUR “CARRY BACK” notes or Trust deeds.
I work with notebuyers/investors that will buy your monthly payments for a lump sum of cash! OR, as JACK teaches, enjoy the monthly returns at a high interest rate! But if you need to cash out now, visit my website at http://www.realnoteservice.com, or call (951)285-2668!
Light FittingsPosted at 22:56h, 27 January
‘`; I am really thankful to this topic because it really gives useful information ~:”