Proposed Rules for Seller Financing from the Federal
Reserve Could Effectively End This Financing Option for Real Estate
Sellers and Deny Buyers This Path to Home Ownership.
Throughout history, the right of a property owner to sell their property on their own terms to a person of their own choosing has been unquestioned. Unbelievably, this fundamental right will be significantly curtailed if not effectively eliminated by proposed new rules from the Federal Reserve implementing the Dodd Frank act. As real estate professionals, if you believe that seller financing is important to this real estate market, we need you to follow the links in this article to learn more about this issue and to make your opinion known. The deadline to officially comment on the rules is this Friday, July 22nd, 2011.
Seller financing has long been recognized as a viable alternative in real estate transactions. With the challenging market today it may become the best solution for turning this market around. One of the biggest trends today is the number of homes that are being sold with seller financing alternatives like lease options, seller carrybacks and “subject to” financing. Sellers are facing increased competition to find a traditionally qualified buyer from an ever shrinking pool.
Short of drastically reducing their selling price, they have to consider alternatives like seller financing to expand the number of potential buyers for their homes. On the other side of the transaction, potential buyers are being kept out of the market because of tightening credit standards and larger down payment requirements. There are large numbers of credit impaired, but otherwise qualified buyers (those with only a short sale or foreclosure on their credit but who still have a good income) who want to buy a home but can’t qualify for traditional financing.
Now, acting in what it calls the best interests of consumers, the federal government has decided that it needs to completely control seller financing in this country. The Dodd Frank Act at first looked like good news for seller financing because it permitted property owners to sell up to three seller financed properties per year without needing to be licensed as a loan originator. Now the proposed rules to implement the seller financing exception under Dodd Frank have been published and they are so onerous as to almost be incomprehensible.
These rules were created for the banks and institutional lenders to follow, but the government has decided in its good judgment the rules should encompass seller financed transactions as well. If these rules are passed without an exemption for seller financing, an individual who wants to sell their own home will be required to understand and comply with rules that span 169 pages and carry significant penalties that could bankrupt a Seller for noncompliance.
Deadline is this coming Friday, so several links are listed below for you to learn more about the topic, how you can comment on the rules and also provide you with ideas and suggestions for your comments.
To learn more about the rules and how they will impact seller financing please go to: http://papersourceonline.com/2786/red-alert-seller-mortgages-may-be-outlawed-you-must-act-now/
To submit your comment on the proposed rule, go to the following link and scroll down to the bottom of the page and next to “Comments” click “Submit”.
http://www.federalreserve.gov/newsevents/press/bcreg/20110419a.htm
T
Throughout history, the right of a property owner to sell their property on their own terms to a person of their own choosing has been unquestioned. Unbelievably, this fundamental right will be significantly curtailed if not effectively eliminated by proposed new rules from the Federal Reserve implementing the Dodd Frank act. As real estate professionals, if you believe that seller financing is important to this real estate market, we need you to follow the links in this article to learn more about this issue and to make your opinion known. The deadline to officially comment on the rules is this Friday, July 22nd, 2011.
Seller financing has long been recognized as a viable alternative in real estate transactions. With the challenging market today it may become the best solution for turning this market around. One of the biggest trends today is the number of homes that are being sold with seller financing alternatives like lease options, seller carrybacks and “subject to” financing. Sellers are facing increased competition to find a traditionally qualified buyer from an ever shrinking pool.
Short of drastically reducing their selling price, they have to consider alternatives like seller financing to expand the number of potential buyers for their homes. On the other side of the transaction, potential buyers are being kept out of the market because of tightening credit standards and larger down payment requirements. There are large numbers of credit impaired, but otherwise qualified buyers (those with only a short sale or foreclosure on their credit but who still have a good income) who want to buy a home but can’t qualify for traditional financing.
Now, acting in what it calls the best interests of consumers, the federal government has decided that it needs to completely control seller financing in this country. The Dodd Frank Act at first looked like good news for seller financing because it permitted property owners to sell up to three seller financed properties per year without needing to be licensed as a loan originator. Now the proposed rules to implement the seller financing exception under Dodd Frank have been published and they are so onerous as to almost be incomprehensible.
These rules were created for the banks and institutional lenders to follow, but the government has decided in its good judgment the rules should encompass seller financed transactions as well. If these rules are passed without an exemption for seller financing, an individual who wants to sell their own home will be required to understand and comply with rules that span 169 pages and carry significant penalties that could bankrupt a Seller for noncompliance.
Deadline is this coming Friday, so several links are listed below for you to learn more about the topic, how you can comment on the rules and also provide you with ideas and suggestions for your comments.
To learn more about the rules and how they will impact seller financing please go to: http://papersourceonline.com/2786/red-alert-seller-mortgages-may-be-outlawed-you-must-act-now/
To submit your comment on the proposed rule, go to the following link and scroll down to the bottom of the page and next to “Comments” click “Submit”.
http://www.federalreserve.gov/newsevents/press/bcreg/20110419a.htm
T
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