You're About To Lose Your Rights As an Investor

[b]As many of you know, on July 22, unless others in congress intervene, the US government will make it illegal to seller finance the traditional way.

What does this mean to you?

You will be limited to seller financing 3 properties a year.

It will be illegal to offer short term financing. All seller financed loan will HAVE to be 30 years long.

It will be illegal to include a “balloon payment.”

It will be illegal to offer “interest only.”

Your buyers can back out of any deal you offer within the first 3 years…!

Your buyers are entitled to get ALL their down payment money back within 3 years…!

Your buyer can unwind your deal AT WILL anytime within 3 years…!

What does this really mean?

  1. This means that you will not get paid off for 30 years if you offer seller financing.
  2. You will have to put the buyer’s down payment into a reserve account until your buyer’s right of rescission expires after 3 years.
  3. You will not be able to buy and seller finance more than three properties in a given year.[/b]

All investors need to contact their congressman and senators and protest this malfeasance by the banking lobby to eliminate financing competition, and undermine the free market. Otherwise, we have no one to blame, but ourselves, for not acting.

Can you provide a link for this legislation? Thanks!

HUD updates to the SAFE ACT:

My letter to my congressman:

Dear Congressman,

The SAFE ACT legislation is about to undermine an entire real estate industry due to its over-regulation and unjustified interference with private lending business.

This legislation will have a severe and negative impact on the average real estate rehabber, merchandiser, or investor wanting to seller finance his own properties. There are so many onerous provisions in this law that it is breathtakingly anti-free market, if not anti-capitalist.

Notwithstanding, this law requires seller/lenders to offer a one-size, fits-all, loan with insufficient ability to tailor terms to the buyer/borrower’s ability, and/or willingness to pay. This law also stipulates that all seller financing must be both permanent and fully amortized. This is completely dysfunctional for those seller/lenders who simply cannot afford to wait thirty years to get their money back out of a property. This also necessarily makes the borrower’s payments less affordable, thus artificially driving prices up, or down, in order to accommodate an artificially-required amortization schedule.

Then there is the 3-year, Borrower’s right of rescission. This stipulation is completely unworkable. If any buyer/borrower wants out, he can walk away, sell the property, or take the risk of the market, just like any institutional borrower might. However to require small operators to accommodate a borrower’s change of mind three years into a transaction is not only ridiculous, but too onerous on the seller/lender. What car company could stay in business with this provision? What bank?

As seller financiers, we most often finance buyers who cannot get conventional financing for any number of reasons. As a result we regularly provide short term financing to accommodate borrowers while they either improve their credit, or otherwise qualify for institutional financing.

This business is profitable and sustainable in volume only. Rarely can any seller financier leave large amounts of money in a given property and permanently finance a buyer/borrower …and stay in business, much less leave large amounts of money in a property for several decades.

Seller financiers of all types provide a necessary financing option, if not a service, to a significant portion of buyer/borrowers today that cannot get conventional financing. Limiting these options the way this legislation reads, is terribly unfair to all parties involved, but highly self-serving for institutional lenders that are not required to follow any of this stipulations.

Meanwhile, at this level of operation, seller financiers are able to provide highly customized terms and interest rates that make selling the “hardest to sell” property actually salable. So to require that these seller financiers do what even banks are not required to do is both unfair, unreasonable, and too onerous a burden to place on the private lender.

I believe this limits the opportunity for home ownership for many, and diminishes the motivation for anyone to attempt to help credit-challenged buyer/borrowers finance their dream homes.

Please stop this unfair, unreasonable, and onerous legislation.


Jay Palmquist

Go here to leave a message for your congressman, if you are wanting to continue to enjoy the option of unfettered seller financing…

Here’s some more…

Thanks for the update. This really is an important issue. Hope this shakes out in our favor.

Anyone know what happened with this?

"Your buyers can back out of any deal you offer within the first 3 years…!

Your buyers are entitled to get ALL their down payment money back within 3 years…!

Your buyer can unwind your deal AT WILL anytime within 3 years…!"

This law if past does not make any legal sense. With owner fianance the title goes to the buyer. Are you saying that in 3 years the buyer can give back the title get back their down pay and walk away? If this is true, this is great way for the banks to control the financing of real estate since who in their right mind would do owner finance under such laws.

This is about Marxism, period. I realize that this sounds like hype to the uninitiated, but private enterprise is being discouraged by over-taxation, over-regulation, and over-supervision by the government right now. Why? Because private enterprise is a threat to progressive government intervention. Personal freedom is too much freedom in this case.

To add insult to injury, progressives are rewarding their high finance cronies for going along to get along with Frank/Dodd real estate financing debacle, by limiting competition. So, all this is a nod to the banking industry. Never mind that seller financing is the answer for those whom the banking industry won’t finance in the first place.

So, the problem they are solving is non-existent, except that it solves a pesky problem of progressives not having control over every aspect of everyone’s life, business, and finances. It’s sick.

What’s worse these progressive pawn off the task of imposing the regulations to a group of unelected people who are completely unaccountable to the public for what they enact. It transfers liability and responsibility away from the elected officials.

Socialists have been enacting unpopular regulations through unaccountable bureaucracies like nobody’s business in Europe. In the end, the people have no real remedy for actions taken against them, other than to riot. This is what the US congress is finding as a popular solution for themselves. This gives them 3 things: Unfettered reelections, maintenance of their income, and keeps the people a.w.a.y.

Frankly, this congressional insolence, as experienced recently by the imposition of Obamacare which we learned we would, “find out what’s in the bill after it is passed,” thank you Nancy Pelosi, is what has given rise to the T.E.A. Party movement.

So, at this point, we either wait and see what rights we lose on, or before, January 2013, or we protest like stuck pigs. I prefer the pig route. I’m not proud.

Would lease option be the way to go if this law is past? Being that title does not change hands till buyer exercises their option and the option coniseration is non-refundable if the buyer does not buy.

If this regulation is established as proposed, lease/options will be the only practical option for seller financing.

Lease / options will be the next target.

The vague term “habitual” seller financier is the buggaboo here. Each state has to determine what “habitual” means in order to be able to seller finance without government interference and these ridiculous limitations (and licensing requirements).

Meantime, who would offer seller financing in the first place, if you had to go the entire 30 years, fixed interest only, regardless of the term of the underlying financing. So, yes lease options become the only option at this point (when the regulations are finally implemented as proposed).

Gosh, this and all the other sensless laws that are being past every day makes me feel like moving to another country. The other day I was reading an article about how the FDA went after Diamond Foods for mentioning the health benefits of walnuts on their site. The FDA basically deemed walnuts for be illegal. Please don’t get me wrong, I love my country, I just can’t bare to watch the freedoms that made it great disintegrate before my eyes. My child will not enjoy the freedoms I once had. I wonder what kind of world my grandchildren and great grandchildren will live in.

We ask what’s causing this loss of our freedoms?

For me it’s a lack of character on the whole of the nation. As more and more people are enticed to become dependent on the government (infantalized), and less and less remain/become self-reliant, it makes it that much easier for progressive-minded (“progressive” as in Marxist wanna-bees) to incrementally take away our freedoms without much of a fight.

Isn’t it easy to steal a blanket off a baby? Yes. Do they fight? No. How about taking candy away from them? Then …we’ll get a screaming fit.

Otherwise, babies don’t care what happens around them, as long as they have their naps and get their candy. Progressives know that, and thus want as many to become ‘babies’ as possible.

That’s what independent-minded, character driven and self-reliant folks in this nation have to fight against; the infantalization of more and more people … or better …fighting against the lure of becoming emotional cripples trained to give up freedom(s) for security.

It’s all about character. And the ones taking away our freedoms have the least amount of character, and hope we abandon ours.

Honestly, most people would rather focus on reality TV trash than the reality of loosing their freedoms. Not sure if they are just overwhelmed or dumbed down.

I am wondering if these laws can be reversed if we can get conservatives in office in the coming election? Please I hope people vote republican if not our country will changes for the worse.


I’m very familiar with the SAFE ACT from the loan originators standpoint. I have read and studied as much info. as I could on this post. I have researched this issue with my own state DFI as well as looked at the final rules of the SAFE Act and looked at NAR’s comments to HUD on seller financing.

It is now my understanding that there isnt currently any law that prevents seller financing and that the law that willl potentially change that landscape is the Frank Dodd Act which is in the comment stages now and will come out before 1/21/2013. The CFPB Consumer Finance Protection Bureau will then need to have their final rules as it applys to this ACT no later than 1/21/2013 and those rules must be implemented no later than 12 months later or 1/21/2014 or if they dont come out with rules, the ACT will take effect 1/21/2013.

Did I get alll that right? If so, we have time to adjust and find ways to change our business. I’m not saying I agree with what is happening here on any level, but sometimes we are forced to make changes to deal with stupid unintended consequences of new rules…This may be one of them:(

This is precisely the problem. They’ve gotten so divided and blindfolded that we forget facts, history and reality…except reality tv shows. The erosion of our rights isn’t a Democratic or Republican issue. It’s an institutional problem. You can vote into office all the conservatives/republicans you want, and we will have similar legislative backwardness. As another poster stated, we must resist to sheepishly agree to, and follow every and any legislation on the gimmicky claim of national security. How many of our constitutionally granted rights were taken away under the Bush administration? Many. So, the idea should be to be attentive to pending legislations, and be active in mobilizing members in our industries and or communities to call their representatives state their objections. And if those objections aren’t honored, then VOTE the “representative” out at the first opportunity–whether he/she be Democrat or Republican. This is the only way we will get them to REPRESENT us and our interests as a society and a nation. We will forever be stuck in this back-and-forth windmill so long as we allow our employees “elected officials” to divid us based on false party ideology; and control our minds. Republican and Democrat = One and the same, in different camouflages.

So where are we on this issue as of now?

All the best,

any update on this?

The regulations are supposed to be finalized sometime on, or before Jan 2013. According the video I posted a few posts back, the government will likely take it’s sweet time on this one.

However, another twist is coming about… conservatives are floating balloons about unwinding Frank/Dodd and some other grossly liberal down-our-throats regulations, if they can successfully regain control of the house and senate. I’m hopeful, but I’m not siting back and hoping.