Owner Finance!

I have a seller right now who wants to sell his house for 30k. This price works for me, because I could probably put in 15k in the house and sell it for mid 80s. He also agreed to 15k down and the other 15k in 6mos, no interest. When I called my realtor to draft up the paperwork, she told me that owner financing is no longer available unless if the seller lived there, and I remembered reading about that here.

So, could I not re-structure this deal and 'buy' this house for 15k, and then have the seller put a lien on the house once I have the title for the other 15k?

I am fairly new, so I am not sure if what I said is even possible or a good idea. Any workarounds to this law? I thought about L/O as another alternative, but I wouldn't have the deed in my name.

Edited: 06/26/2010 at 12:43PM

Don Konipol

Hard Money Lender · Tempe, Arizona

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May 05 '10, 12:52 PM

I think your realtor has some bad information. New Hud rules about owner financing were to go into effect April 1 but have been delayed till June 1. The rules do not eliminate owner financing on single family homes, they do state that a registered mortgage originator needs to be employed to "originate" the loan. This would entail taking this deal to a mortgage originator who would originate the paperwork, get all disclosures signed, and make sure the financing does not violate HUD guidelines (if you think this is uncalled for interference by a now socialistic leaning government in private business affairs you are right!). The seller can still provide the financing, obviously the cost will be increased by the fee charged by the mortgage originator. Although I expect that once this HUD mandate takes effect the fees will be all over the board, there is actually no reason that they should be charging any more than an attorney would per hour.

Edited: 06/26/2010 at 12:44PM

Jon Klaus

Real Estate Investor · Dallas, Texas

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4,842 posts
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May 06 '10, 04:36 AM

Don, can you point us to a source on these new rules? Thanks

Edited: 06/26/2010 at 12:44PM

Jon Klaus, SellPropertyFast
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Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

6,874 posts
11 awards

May 06 '10, 04:50 AM

Jon,

Try this link:

http://www.biggerpockets.com/forums/49/topics/45688-new-scary-hud-rules

Edited: 06/26/2010 at 12:44PM

Sammy Johnson

Homeowner · Dalton, Georgia

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108 posts
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Jul 27 '10, 07:57 AM

Virgin money has a website that takes care of these legal papers too

Alysha Duran

Real Estate Investor · Malibu, California

5 posts

Aug 20 '10, 08:31 AM

You don't have to be licensed. The way it passed was you can do up to 3 a year I think.

Bryan Hancock

Real Estate Investor · Austin, Texas

Pro

6,717 posts
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Aug 20 '10, 10:57 AM

You don't have to be licensed. The transaction just has to go through a RMLO after the end of this month when the Safe Act will start to be enforced. We have a transaction closing at the end of this month precisely to avoid the additional RMLO "tax" on owner-financed transactions.

Going forward the buyer will just have to pay an extra $500 to our RMLO to get it done with the disclosures and such.

Bryan Hancock, Bullseye Capital
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