RMLO needed for land contract sale? 10+ sales this year

Buying & Selling Real Estate
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RMLO needed for land contract sale? 10+ sales this year

Brian Kempler
Member since 2021 · 87 posts · 14 votes

Hello, if I plan to sell 10+ houses this year on a land contract, does Dodd Frank apply to me? Does the land contract sale also require an RMLO to "originate" the financing? No lien will be secured against the house by me (the seller). If it matters, we focus on Alabama (Also Missouri although less activity up there).

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Brian Kempler:

Hello, if I plan to sell 10+ houses this year on a land contract, does Dodd Frank apply to me? Does the land contract sale also require an RMLO to "originate" the financing? No lien will be secured against the house by me (the seller). If it matters, we focus on Alabama (Also Missouri although less activity up there).


 Forget what you are giving them, a mortgage, a deed of trust, a land contract... You are entering into a consumer agreement which follows the laws of consumer protection. It is wise to have a RMLO to confirm the borrowers ability to repay and other consumer protection laws. Since this would be considered your course of business because it is not a one off, you should also look into things like using 3rd party servicers etc. to maintain compliance.

If you want to do it right, then yes use underwriters to review the loans and treat it as if you were Wells Fargo originating a loan to yourself. This also includes running credit, getting an appraisal etc.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Brian Kempler:

    Hello, if I plan to sell 10+ houses this year on a land contract, does Dodd Frank apply to me? Does the land contract sale also require an RMLO to "originate" the financing? No lien will be secured against the house by me (the seller). If it matters, we focus on Alabama (Also Missouri although less activity up there).


     Forget what you are giving them, a mortgage, a deed of trust, a land contract... You are entering into a consumer agreement which follows the laws of consumer protection. It is wise to have a RMLO to confirm the borrowers ability to repay and other consumer protection laws. Since this would be considered your course of business because it is not a one off, you should also look into things like using 3rd party servicers etc. to maintain compliance.

    If you want to do it right, then yes use underwriters to review the loans and treat it as if you were Wells Fargo originating a loan to yourself. This also includes running credit, getting an appraisal etc.

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y

    are they owner occ   or investors ? makes a difference

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  • Brian Kempler
    OP
    Member since 2021 · 87 posts · 14 votes
    2y
    Quote from @Jay Hinrichs:

    are they owner occ   or investors ? makes a difference

     My buyers are and will be homestead buyers eg owner occupants

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  • Brian Kempler
    OP
    Member since 2021 · 87 posts · 14 votes
    2y

    .

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Brian Kempler:
    Quote from @Jay Hinrichs:

    are they owner occ   or investors ? makes a difference

     My buyers are and will be homestead buyers eg owner occupants

    Then u need to do what Chris suggested 
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
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  • Brian Kempler
    OP
    Member since 2021 · 87 posts · 14 votes
    2y
    Quote from @Chris Seveney:
    Quote from @Brian Kempler:

    Hello, if I plan to sell 10+ houses this year on a land contract, does Dodd Frank apply to me? Does the land contract sale also require an RMLO to "originate" the financing? No lien will be secured against the house by me (the seller). If it matters, we focus on Alabama (Also Missouri although less activity up there).


     Forget what you are giving them, a mortgage, a deed of trust, a land contract... You are entering into a consumer agreement which follows the laws of consumer protection. It is wise to have a RMLO to confirm the borrowers ability to repay and other consumer protection laws. Since this would be considered your course of business because it is not a one off, you should also look into things like using 3rd party servicers etc. to maintain compliance.

    If you want to do it right, then yes use underwriters to review the loans and treat it as if you were Wells Fargo originating a loan to yourself. This also includes running credit, getting an appraisal etc.


     "It is wise" -- Is it also legally required by the consumer protection laws you mentioned?

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Brian Kempler

    Well if you do not send a borrower CFPB compliant statements and they do not pay you are not allowed to collect interest, late fees etc…

    That’s kind of a big deal, atleast for me it is.

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