Anthony, you dug deep to ask that question! LOL
The problem I see, from experience with notes is that when a seller financed note is sold the borrower, about a third of the time, questions the validity of someone being able to buy the note. I have been told by borrowers that I could not buy the note without their consent.
You'll find that most borrowers in small privately held notes are unaware that their note can be sold by the holder, but that lack of education may be changing with the advertising for notes and annuities like that on TV. Along the same lines of the borrower being unaware, I also found that collections and foreclosures were more adversarial.
More "private mtg" borrowers were more likely to obtain legal advice when they had significant equity and were in default or pending foreclosure. I recall one individual who insisted that his payoff would be what was paid for the note at a discount! His attorney even tried to justify that line of reasoning.
Sorry this is so long, but it ties together.
Point is that if you buy a note later on that should have been originated under the Safe Act and was not and it goes to foreclosure, you may have a problem.
In any basic business law class, you'll learn that a contract or agreement that is in violation of law is unenforceable. At the very least, a note that is contested can be difficult to foreclose on or collect and I can see where some really conservative judge might bend toward the note holder to the extent paid for the note, so there would still be a loss considering court costs and expenses.
Bottom line, I would not buy any note that did note have the seal and/or registration number of the mortage originator on the original note, if I had any doubt at all that it was not made by an owner occupied originator. And how do you prove that? Due diligence is more important now than ever, IMO.
Lately, I have been talking to regulators concerning the Safe Act and how their take on the issues. So far, they have enforced the Act with several originators. The issue has already been brought to their attention by banks who were approached to refinance such obligations.
This, taken down the road, seems to say that when the borrower goes to a bank to obtain the payoff loan that the lending institutions will be reporting illegally originated notes and agreements.
On the other hand, in Missouri, the Act is being enforced very conservatively, that the originator needs to gain some benefit from the origination and that the sale price or interest is not considered beneficial. That opens some doors for investors,at least in Missouri.
On the installment issue, it doesn't matter how you color the deal, if it provides an equitable interest to obtain the title and payments are being made it falls in as an installment pruchase or financing scheme.