HUD's Scary New Rule-Call To Action

The following information is extremely important!

HUD Issues Problematic Rules Interpreting SAFE Mortgage Licensing ACT

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at www.regulations.gov  Use the search parameter "HUD" and the keyword “safe mortgage”.  Please review and comment regarding the impact of this broad interpretation of the law. 

“In addition to establishing HUD’s responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified."

History:

As you may recall, we lobbied hard in North Carolina last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc...  However, that law was passed subject to the Department of Housing and Urban Development's (HUD) approval of the law as "compliant" with the intention of the federal law.  If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state.  HUD has since issued proposed rules.  In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:

We learned about the publishing of the rules very late in the process... and the deadline for comment is upon us on February 16.  However, we desperately need for thousands of REIA members across the country to go on record with HUD on this issue.  We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless our members have clearly communicated that they are opposed to this portion of the rules. This is your chance to be counted on this issue.

 

PLEASE SUBMIT YOUR COMMENTS TO HUD!  We have only four days left to flood this system with comments.

Follow these simple steps:

1.  Logon to www.regulations.gov   You will see two white boxes for searching

2.  On the left box labeled "Document Type", pull the menu down and select "proposed rules"

3.  On the right box labeled "Enter keyword or ID", enter "safe mortgage".  Then, press search

4.  Locate the blue search result "FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities..."

To read the rules:  click on the blue title FR-5271-P-01  You will be taken to another page. You will see "views".  You can click on PDF file or another symbol which will show you the rule document online. If you want to submit a comment after reading the document, use your back button to return to the search results and then move on to #5 below.

5.  To submit a comment:  On the right of the screen, across from FR-5271-P-01, click on "submit a comment"

6.  Complete the form providing required information with blue asterisks and your comments and then submit.  (Note: you do not need to fill in the blanks for organization name, government agency type, or government agency)

What do you say?

Say what you feel, but say it politely!   The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.  Some ideas from others:        

·        The SAFE Mortgage Licensing Act was intended to regulate the mortgage industry, not private individuals.  If I own my own properties and want to sell them to someone and let them pay me, I should have the right to do this without being a licensed mortgage broker

·        Many properties have special circumstances where full bank financing is not possible.  Vacant rsidential lots, investment homes, homes in flood areas, etc. may not be eligible for traditional financing. Individuals who own their own properties have always been able to offer other private parties the option to pay them directly.  These rules would prohibit that for all properties which are not owner occupied.

·        bank loans are not available on some types of properties

·        the tight lending climate has made bank financing "out of reach" for many

·        seller financing is an "age old" tradition based on private property rights

·        these rules would prohibit even partial seller financing - i.e. a "seller second"

·        according to HUD's "Residential Finance Survey" in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear

·        an estimated 6 million Americans own a property other than their own primary residence

·        an estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties

·        40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing

·        approximately 5% of homes in US are for sale or for lease... seller financing may be key to liquidating this inventory

The continued success of our industry as we know it is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.