HUD Proposal Would Eliminate Seller Financing – Call to Action!

Not sure if you guys saw this, it’s been floating around on the Internet, I copied it into my short sale blog as well at

Here is the text:

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

Use the search parameter “HUD” and the keyword “safe”. 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.”


As you may recall, we lobbied hard 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 less than one week to flood this system with comments.
Follow these simple steps:

  1. Logon to

You will see two white boxes for searching

  1. On the left box labeled “Document Type”, pull the menu down and select “proposed rules”
  2. On the right box labeled “Enter keyword or ID”, enter “safe mortgage”. Then, press search
  3. Locate the blue search result “FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ….” To read the rules, click on this title. 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.
  4. On the right of the screen, click on “submit comment”
  5. Complete the form providing required information and your comments and then submit

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:

* 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.

Hey SSA,

I actually posted the same thing on the Sub2 Forum.
I’ve got alink to the HUD Docs my site as well as some advice.

one thing to keep in mind, along with all the other hairbrained ideas that seem to come down from the govt that restrict what we do is this:

Prepare for it like it will pass.
In Texas, they had legislation that limited freedoms with lease options.

We found a way.
1st: Read and understand the legislation.
2nd: get creative and see how you can work within the framework.

we’ve done it before, we’ll succeed again.


Good call Dennis,

If there is one thing I’ve picked up from these forums and others like them, it’s that almost anything can be done by being creative, even in the very rigid and regulated worlds of investment and real estate.

Thanks Artisan!

Next step: share what we learn and what works in the real world.
If this HUD thing goes through, we’ll deal with it, tweak it and teach it.

More to come…


What many who are posting this alarm on the various internet forums don’t seem to realize is that the SAFE Mortgage Act has already been passed.

The legislation that has aready been passed excludes individuals who are seller financing their own home from the Act. The SAFE Act makes no provision for excluding investors who are seller financing their own property.

HUD is not proposing to eliminate anything. Seller financing is still possible. The Act simply says that if the seller is carrying the financing for a property that is not his personal residence, then the seller has to be licensed as a mortgage originator or be a real estate licensee, or be an attorney.

All you can hope with a letter campaign is to convince HUD that the intent of Congress in excluding a seller financing the sale of his personal residence from the provisions of the Act is also extended to the investor seller financing the sale of his own property.

Might be a little hard to do in the face of recent experience with all the mortgage fraud perpetrated by unscrupulous investors.

Good luck.

Personally, I am not convinced that some form of licensing and mortgage originator regulation for investors whose business model depends upon carrying back financing for their buyers is not a good thing.

Thanks for the clarification, that’s some great additional context Dave.

Can I put a twist on it.

What is the big friggin deal… Hire a darn broker to write up the darn paperwork… It cost 150-200… charge that to the buyer as a cost… I know the cost because you MUST hire a broker to write it if you want to charge more then 10 percent when making a loan that isnt on property you sell. Call your hard money guy and ask him who he uses if he isnt a broker…

I dont understand why we try and find things we cant do instead of finding the way to do them…

But thats just me


Could not have put it better myself there Michael I thought the same thing. And I care because??? Honestly let the Realtor write the contract. Look at it like this if you are not paying the Broker to do this and you spend 2 hours doing it yourself to save $150.00 it might have cost you your next deal… Why? That is two hours that you could have spent looking for it!

Comes back to Henry Ford Do what you do best and outsource the rest…