Dodd-Frank and SAFE Acts are two pieces of legislation aimed at protecting the American consumer or average home buyer from mortgage fraud. Both impacted the business of finance and in particular, seller financers or private lenders. Per Investopedia, a valued and respected authoritative reference for all things business, seller or owner financing is defined as "A real estate agreement where financing provided by the seller is included in the purchase price."
Before the SAFE Act and Dodd-Frank Act financial reforms, there were no restrictions on the amount of times a private party selling real estate could create or offer owner financing to another private party who wanted to buy a home. Now there's a limit of 3 real estate note transactions within a 12-month period. That has changed this type of transaction, along with other things.
The Secure and Fair Enforcement Mortgage Licensing Act, or SAFE Act, which was passed by Congress in 2008 as part of the Housing and Economic Recovery Act (HERA) established standards for the licensing and registration of state-licensed mortgage loan originators.
The effective date of the Dodd-Frank (Dodd-Frank Wall Street Reform and Consumer Protection Act) amendments to the Truth in Lending Act which pertain to seller financing rules is January 2014; but many have already taken or are taking action to comply.
So after all the "voices" were heard, private lending has not been severely handicapped. On the plus side, Seller Financers can now point potential Buyers to specific federal and state rules with which they are in compliance, as a sort of check-mark for consumer financial protection assurance. Though there are signs that the economy and in particular, the housing market may be improving, many cash-strapped buyers can not meet the eligibility requirements to obtain a bank loan. Seller financing is a viable means for them to make their dream of home ownership a reality; and there quite a few sellers who offer owner finance homes for sale.
As a former federal employee whose duties used to involve drafting regulations, legal rulings, policies and procedures to implement law, etc., unless the actions taken by Congress were wholly unreasonable, after people take a few deep breaths, they usually settle down, carefully examine the new rules, evaluate what the necessary changes are that they need to make in order to bring themselves into compliance, and then they do it!!
Which Blogging Platform Do You Use and Why?on 06/21/2014
Searching for the Truth?on 05/14/2014
Review of 3 Bollywood Movies Post September 11thon 05/06/2014
The Eagle Soars Againon 04/10/2014
Comments
@ologsinquito - Thanks!
Hopefully this will put curbs on the nefarious practice of house flipping during real estate run ups. Great article and I'm pinning it.