House Bill 1728
Friday, 12 June 2009 15:12
Calling all Investors…
Have you heard about House Bill 1728: Mortgage Reform and Anti-Predatory Lending Act? You need to pay attention to this as it does affect real estate investors and seller financing. Please send this to as many investors as you can. We must get the word out!
It is important to take the time to read the Bill in its entirety (http://m1e.net/c?58809746-84wrfBMr/5LXI%404322480-OK4OwkMt65QKk) and take action NOW if you do not agree with what congress is trying to do. It has passed the House and is now moving onto the Senate.
A quick summary:
The Bill covers several topics surrounding mortgages and specifies duty of care standards for originators of residential mortgages (this includes seller financing).
According to Congressional Research Service just some of the topics include-
· Directs the federal banking agencies to prohibit or condition terms, acts, or practices relating to residential mortgage loans that are abusive, unfair, deceptive, predatory, inconsistent with reasonable underwriting standards, or not in the interest of the borrower.
· Subjects a creditor to civil actions for rescission of a residential mortgage loan in the case of specified abuses. Limits the liability of good faith assignees or securitizes of a residential mortgage loan to loan rescission and certain other obligor costs.
· Prohibits specified practices, including: (1) certain prepayment penalties; (2) single premium credit insurance; (3) mandatory arbitration (except for reverse mortgages); (4) mortgage loan provisions that waive a statutory cause of action by the consumer; and (5) mortgages with negative amortization.
What others are saying:
I have had several people tell me that it is not an issue as the bill is requiring owner financed deals fall within the definition “Truth in Lending” law. The bill also proposes “a person who sells a home is a ‘mortgage originator’ meaning they would need to be in compliance with RESPA. Also, for seller financing the buyer would need to be qualified, meaning you would need to check their credit, debt and income. If you are an upstanding investor then you should not be concerned with these requirements.”
Others are pointing out that the bill must be stopped as it states, “with respect to a residential mortgage loan, a person, state, or trust that provides mortgage financing for the sale of 1 property in any 36 month period, provided that such loan is fully amortizing, is to a sale for which the seller determine in good faith and documents that the buyer has a reasonable ability to repay the loan and has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases…”
A colleague of mine,
· Selling YOUR OWN HOME using a land contract or owner-held mortgage or Trust Deed so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments
· Carrying back owner-held second mortgages on investment properties that you sell
· Doing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential”
Here are some sample letters that I found floating around.
IF YOU HAVE A REAL ESTATE LICENSE
Dear Senator [name];
My name is XXXXXXXX XXXXXX and I am a life-long resident of XXXXXXX.
I am writing you to encourage you to vote NO on HR 1728, the "Mortgage Reform and Anti-Predatory Lending Act".
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of Ohioans and the ability of home owners to sell properties in this already-slow market.
As a real estate broker, I have seen several dozen cases in the past year of home sellers and buyers coming to an agreement for an installment sale on a property that the owner desperately needed to sell (often to avoid foreclosure) and the buyer desperately wanted to buy, but could not raise the downpayment needed for conventional financing.
In all cases, these sales turned out to be win-win deals for the buyer and seller; the seller was able to get rid of an unwanted property to a buyer who loved it, and the buyer was able to get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.
In my state; XXXXXX, these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the "owner financing" market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
XXXXXXXXX
Licensed Real Estate Broker license #
Phone #
email
****************************************************************
IF YOU SELL HOUSES WITH OWNER FINANCING
Dear Senator [name];
My name is XXXXX XXXXX and I am a life-long resident of XXXXXXX.
I am writing you to encourage you to vote NO on HR 1728, the "Mortgage Reform and Anti-Predatory Lending Act".
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of Ohioans and the ability of home owners to sell properties in this already-slow market.
As a professional housing provider, I sell several houses each year to home buyers on installment sale [or, if you have not purchased a property, add here: "I had planned to sell several houses this year on installment sale]-a practice that would become impossible under this law in its current form.
I find that in today's slow market, the best way for me to help buyers who desperately want to become homeowners, but who cannot raise the downpayment or meet the other terms needed for conventional financing, is to allow them to make payments directly to me.
These sales are win-win deals for both the buyer and myself; I am able to turn over homes that I've bought, renovated and rehabbed (often from foreclosures) to buyers who love and can afford them, and the buyer can get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.
In my state; XXXXXXX, these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.
Without the ability to sell homes in this way, I will no longer be able to invest in and renovate any of the tens of thousands of vacant, ugly houses placed on the market by the foreclosure crisis, and my small-but-beneficial business will literally be in ruins. Perhaps more importantly, the homeowner-buyers that I serve will be forced to rent rather than moving toward the American dream of home ownership.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the "owner financing" market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
XXXXXXX
Company Name
Phone number
email
*************************************************************
IF YOU BUY HOUSES WITH OWNER FINANCING
Dear Senator [name];
My name is XXXXX XXXXX and I am a life-long resident of XXXXXXXX.
I am writing you to encourage you to vote NO on HR 1728, the "Mortgage Reform and Anti-Predatory Lending Act".
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of the people of XXXXXX and the ability of home owners to sell properties in this already-slow market.
In the past year, I have purchased and renovated several homes-made possible only because the sellers of these homes were able to sell to me using owner financing in an unrestricted way.
For many of these property owners, seller financing was the only way to unburden themselves of an unwanted property that, in some cases, was headed toward foreclosure before I purchased it.
Without this ability, I can not continue to buy and renovate properties in the neighborhoods that so need me and my colleagues to invest our time, energy, and money in rehabbing properties. Bank financing is not an option for these properties because of the condition; only financing carried by the sellers will suffice.
Section 101(3)(e) would keep my sellers from utilizing this method of getting rid of unwanted properties in today's market, should they have more than 1 to sell.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the "owner financing" market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
XXXXXXXX
Company Name
Phone number
email
**************************************************************
PLEASE TAKE A MOMENT AND READ THE BILL FOR YOURSELF AND DECIDE IF CONGRESS HAS GONE TO FAR.
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