Can you please give more info on this? I am not familiar with it. I know DF can have pitfalls, but your post is news to me. What book are you getting the info from? Thanks.
Yes, it’s intended for RE investors doing the Lonnie Deal type business. The 2 in 2 years limit helps the average homeowner doing an occasional owner finance. BTW, getting the MLO license is only like a 30-40 hour course.
Different states, different rules. Someone correct me if I am wrong. The Feds limit you to 3 originations a year without a license. GA, if you are an individual, you can buy one a year I believe. If you are a business, then you need to register. Costs about $3,000. KY, you have to register and get big bond. Cost about $30,000. See how that comma moved? Indiana, you just need to register as a foreign entity. Ohio, Michigan, nothing. IL, you need a license. WA, you need a license, but it is only a couple hundred dollars.
Here is where you register. It is also where you get all the rules per state. I'm working on my GA registration right now.
And that's not getting an MLO. That's just registering with the state as one who buys and sells. Getting your MLO is different.
@Russell Holmes I would think you could do two in your name and, if you are married, two in your wife name....
You'll need to be a loan originator (or use one) and become a licensed sales person/broker to do more than a couple of seller financed deals per year in Michigan. You (or the originator) will also need to follow all the Dodd-Frank rules for determining the buyers credit worthiness, etc.
FYI: The Poverty Law group in Michigan is pressuring law makers to enact new laws to seriously impede seller financing with land contracts, lease to own or leases with options to buy. Our state lobbying group, which I'm part of, is fighting these draft bills...just be aware that the spotlight is on you. The group's main concern is buyers being unaware of back taxes owed, liens and/or the condition of the property (per the housing code). They claim the unsuspecting buyers are not sophisticated enough to understand the process of due diligence, and--even though they qualify for the $5,000 price tag of the home under Dodd-Frank--they are unaware of back taxes owed, outstanding liens, condemnations by the municipality and the how much work would be needed to bring the property up to code--not just remodel it to their standards as the homeowner. So, in some cases, these buyers put down a chunk of change, start the remodeling process only to lose the property under the contract/lease for failure to comply with tax payments and/or commitments to remodeling and repairs conditions. In these cases, the buyer is unable to recoup any equity since mortgage/note financing was not used. (These land contracts/leases/lease with options are typically done without the involvement of a title company which would discover these issues on behalf of the buyer.)
To avoid future issues (and accusations about your intent), at the very least, if you're going to do these types of deals, I recommend following a best practice of:
- Qualifying the buyer using Dodd-Frank rules.
- Disclosing back taxes/utility bills to the buyer.
- Disclosing any known outstanding municipal notices/condemnations and where the buyer can find out how to get the property back into compliance.
- Using documents/contracts written for use in Michigan.
- Record the land contract/lease/lease with option.
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