SAFE ACT; these changes specifically affect your clients who are owner financing 1-4 Residential property (non homestead or non family transacted) as a part of their business model. For all of those individuals moving forward once the legislation is fully passed; the seller financier/owner will be required to be licensed in accordance with the SAFE ACT as a National Mortgage Loan Originator. This will require 20 hrs of course work, passing a pretty difficult NMLS test, and maintenance of their license on a yearly basis (in addition to making sure dues and MCE are fulfilled). As a licensed National Mortgage Loan originator I am helping those in need with the owner financing goals as an intermediary agent.
I’m very familiar with the SAFE Act as it relates to a loan originator and have passed both the national and state portions of the test and full background checks. I’m not familiar with the fact that you must be licensed as a loan originator if you are offering owner financing.
Would you be so kind as to showing me that portion of the act that covers that?
Thanks again
the actual verbiage varies by state, however it is UNCLEAR in the HUD version and Ohio version (I am in Ohio). Here is the HUD version section that is particular to anything close to seller financing, but it is not spelled out per-se:
i LOAN ORIGINATOR.—
(A) IN GENERAL.—The term ‘‘loan originator’’—
(i) means an individual who—
(I) takes a residential mortgage loan application; and
(II) offers or negotiates terms of a residential mortgage loan for compensation or gain;
(ii) does not include any individual who is not otherwise described in clause (i) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such clause;
(iii) does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless the person or entity is compensated by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, or other loan originator; and
(iv) does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in section 101(53D) of title 11, United States Code.[/i]
i actually have a few msgs into the ‘director’ of the Division of Financial Institutions for Ohio regarding to if this pertains to us. No return calls yet. Been 2 wks.
I had emailed that dpt whom referred me to call this other person, and this is what the email entailed:
[i] If I want to sell a house I own, with seller financing (land contract) in Ohio does the SAFE Act apply to me?
Tony DiCorpo
Cleveland, Ohio
REPLY:
Mr. DiCorpo,
There are numerous factors which would impact whether or not this type of transaction would be covered by the Mortgage Broker Act or Mortgage Loan Act. Unfortunately, your e-mail didn’t provide enough of these details in order for me to answer your questions.
At your convenience, please contact the Division and we would be happy to discuss your specific situation in detail.
Thanks,
XXXXXXXXXX
XXXXXXXXXXXX for Consumer Finance
Division of Financial Institutions
Department of Commerce
77 South High Street, 21st Floor
Columbus, OH 43215
MY RESPONSE:
Hi XXXXXXX,
I did not mean to leave out information. I buy houses and then sell them on land contracts in Ohio. This is how I make a living. If I own the house, (aka have the deed) and it is NOT my primary residence do I need to get a mortgage broker’s license to finance it, if I don’t want to have an attorney prepare the land contract?
Tony DiCorpo
NEW RESPONSE:
Mr. DiCorpo,
It would depend on how they transactions are structured, whether title is transferred, if a mortgage is filed, etc. It’s possible you would be considered a lender not a broker particularly if you are in the business of financing properties. It also has more to do with whether the people financing the homes intend to live in them then if you live in it.
Please give the Division a call at your convenience and we can talk through the specifics of your situation.
Sincerely,
XXXXXXXXX
XXXXXXXXXXXX for Consumer Finance
Division of Financial Institutions
Department of Commerce
77 South High Street, 21st Floor
Columbus, OH 43215 [/i]
IMO it is so vague that it does not pertain to us. Either way seller financing is not what this act was intended to cover. A fellow investor friend of mine suggests to have an attorney close the deals, as the act does not pertain to them. He says he’d hate to have anyone ‘test’ the act on one of us. I agree to an extent. I just wish that i could get confirm on what exactly is included. the very people that enacted this act cannot even give me an answer. Absurd.
I was just talking to my attorney about seller financing last week. He did not mention anything about this. I am in Florida. Should I be concerned?
it’s my understanding this does NOT affect the ability to sells one’s personal residence via owner finance.