Dodd Frank Questions

4 Replies

I was wondering if anyone had any tips or advice on dealing with the Dodd Frank laws?... I’m not too savvy about the details of these new laws, but it seems to be a huge hassle from what I have read so far.

Taking the annoying Dodd Frank regulations into consideration, how is the rent for a mobile home being determined?

According to an older publication of “Deals on Wheels”, There are tax advantages to selling a mobile home as a lease option versus financing it. Again, I realize this may now be an issue with good ol Dodd Frank, but was wondering what other’s out there thought about the two strategies. 

Originally posted by @Brian Gibbons :

Hi 

@Orlando Paz

Dodd Frank and the SAFE Act has made some obstacles, but there are work arounds.

http://www.biggerpockets.com/blogs/3/blog_posts/39...

Mobile homes and Lonnie Deals are difficult right now, but read

@Curt Smith  

@Ken Rishel

@John Fedro

It is not simple with Mobile Homes, but rent to own can work.  Read these posts.

 Brian - I cannot endorse Rent to Own. What follows is from a post I made last week here on BP:

There are many "land mines" in straight rentals of manufactured homes in land lease communities, but the "land mines" of a RTO program are far greater. RTO is a disguised credit transaction subject to all of the rules and compliance issues that purchase money lending are subject to, including the need for a state issued licensed entity the MLO works for. In some states, this is impossible to do because the state has not established a license to handle RTO for residences. Anyone so engaged has created a ticking time bomb for themselves.

That said, there are methods to handle this that are both legal and workable to handle the extension of credit for operators of all sizes. So you are correct in stating, "it isn't simple - but it can work". Rent-to-Own and Lease-to-Own generally cannot legally work because, in many states, their rent to own laws do not apply to residences anymore and the required state licenses do not exist. That does not mean there are not solutions out there, because there are. We have about 500 customers engaged successfully in using these solutions in addition to our core clients who have actually set up their own captive finance companies.  

I would also caution that the link you posted above has some very good information but it is not manufactured housing chattel lending specific. As a consequence, some of the information is incorrect for chattel lenders because it is aimed at mortgage lenders.

This whole area can be very confusing because regulators are also confused. In many states, the licensing authority is the same authority that licenses mortgage lenders and their examiners are going crazy trying to wade through the differences themselves. Our company has actually been engaged to consult to state regulators in six states because they and their staff attorneys are lost and they are embarrassing themselves when they examine non depository chattel lenders who have had to license as mortgage lenders in those states. 

@Ken Rishel

Thanks for that, yes the link was a discussion was not for the MH community, but for 4 or less SFR community.

I will need a note at the top of that post saying that :)

I appreciate all the feedback!

One of the things I find fascinating, is the grey area in terms of whether it’s a personal property or real estate. I’m not oblivious to the fact that it is a home, but it is also considered a vehicle. Now I don’t know if there is such a thing as owner financing with cars, but will this mean that now people who choose to sell their car this way may need to follow the Dodd Frank rules?... Just a little sarcasm!

Just came across a bonus booklet on Lonnie’s website, which discusses the new rules and how to invest without breaking “laws”. Looks like a decent resource, so I’ll just go ahead and order it.

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