Tuesday, September 28, 2010

New Listings
No new listings today.


New Accepted Offers
213 S. Madison St., Stoughton, WI - Paul Wuebben


WRA Legal Hot Tip
Q. The DFI has now indicated it will analyze all seller financing transactions using the following basic tests:

• If the property is the seller’s residence, then it is an exempt transaction and neither the parties nor the brokers need a mortgage loan originator or other mortgage license.
• If the property is not the seller’s residence and the buyer is not purchasing the property for the buyer’s residence, then neither the parties nor the brokers need a mortgage loan originator or other mortgage license.
• If the property is not the seller’s residence and the buyer is purchasing the property to be used as the buyer’s residence, then the seller and the broker need to have a mortgage loan originator or some other mortgage license.

Is anything being done to obtain further exemptions for sellers and brokers and to clarify how some of the definitions and standards used in these tests should be interpreted?


A. The federal SAFE Act was promulgated to “…to enhance consumer protection and reduce fraud by directing States to adopt minimum uniform standards for the licensing and registration of residential mortgage loan originators and to participate in a nationwide mortgage licensing system and registry database of residential mortgage loan originators.” Under the SAFE Act all states were required to enact legislation requiring mortgage loan originator licensing through the Nationwide Mortgage Licensing System and Registry (NMLSR) and implementing other SAFE Act requirements. The SAFE Act gives HUD authority to establish a back-up licensing system for any states whose requirements do not meet minimum SAFE Act requirements.


The intent of this law was positive –unscrupulous actors provided financing that took advantage of consumers. These instances were spotlighted when the housing market crashed. Unfortunately, the SAFE Act was drafted so broadly that it now hampers most seller financing for residential properties, despite the fact that this type of financing is not what the law was targeting.


NAR tried to block the SAFE Act seller financing licensing requirements on the Hill, but was unable to get an exception in the SAFE Act. NAR did get an amendment to Dodd-Frank so that those who provide seller financing for no more than 3 properties in 12 months are not subject to the new mortgage rules aimed at preventing predatory lending.


In NAR’s comments on HUD's proposed SAFE Act rule, NAR asked HUD to exempt seller financing. Failing that, they asked HUD to adopt much more flexibility than what they were proposing to do (seller financing for your own residence is exempt, but not someone who is selling other residences).


HUD has not yet issued a final rule.


Chairman Barney Frank and Ranking Member Spencer Bachus sent a letter to HUD asking that the SAFE Act exempt seller financing from SAFE Act licensing requirements if the seller finances no more than 5 sales in a 12 month period. NAR has also urged HUD, through emails, to provide more flexibility in light of Dodd-Frank. As implementation of the SAFE Act proceeds, NAR will continue to work with HUD and Congress to make this new law less restrictive in its implementation and seller financing more useful as a way to sell and buy property in this extremely challenging mortgage market.