Attention my fellow investors!
The Department of Housing and Urban Development (HUD) is considering a change in the rules that would in turn make seller financing a thing of the past.
Yes, you heard me right!
HUD may take the option away for those not licensed as a loan originator under the Federal SAFE MORTGAGE LICENSING ACT. Seller financing can be limited to financing to a relative or your own personal residence ONLY. If you move out of your personal residence then try to offer seller financing you would not be able to. If you own an apartment building and you do not live in it you would be barred from offering seller financing. If you own more than one property you would not be able to offer seller financing.
We all know how important seller financing is in the real estate world let alone the investor side of it.
The banning of seller financing will affect:
- Single Family Homes – The majority of seller financing is done in this real estate sector.
- Buyers - options will be lessened. Some people do not qualify for a home loan. Some sellers believe in second chances and help families that have been turned down elsewhere for a conventional or government insured loan. First time investors with no credit use seller financing all the time.
- Sellers - options will be lessened. Sellers should retain the right to do what they please with their hard earned equity.
- Multi Family Properties - Obtaining financing for a multi family dwelling is already difficult. Taking away the ability for a seller to offer financing will decrease the sales in this real estate sector.
- Your negotiating options – Should seller financing be taken away you will have less negotiating power at the table. This will be one less wrench in your toolbox.
So what can we do you ask?
The time for us to voice our disagreement is short. We have until Friday the 5th of March 2010 to let HUD and the decision makers; President Barack Obama and Vice President Joe Biden know that this is not the right choice. This right must be retained for home owners. We need to save seller financing. The following are their contact information.
- Department of Housing and Urban Development – Shaun Donovan – [email protected]
- President – Barack, Obama – [email protected]
- Vice President - Joe Biden – [email protected]
Let them know that seller financing is an integral part of our economic recovery. Limiting our options with this proposed rule change is not what congress intended.
To read the full rule change proposal click here
I welcome your comments and discussion on this topic.
Good luck in all you do America.