The latest skinny on Dodd Frank and the Safe Act

[Gilbert Dominguez]

If you are an individual you can owner finance one deal per year, If you are married your wife can likewise owner finance one deal per year. If you are a trust you can do one deal per year. If you are an LLC or some other corporate entity you can do 3 deals per year. If you are married and your wife has a separate LLC she can do 3 deals per year

and all this is with regards to only owner occupant. If you sell to investors Dodd Frank and the Safe Act do not apply. ONLY TO SOMEONE WHO IS GOING TO OCCUPY THE PROPERTY OR HOUSE AT THEIR PRIMARY RESIDENCE. 

After the 3 deals per year if you want to do more than 3 per year then and only then do you have to either be licensed or hire a licensed loan originator. However unlike some are thinking there is a process you can still be the owner financier just not be the Loan originator and you have to document a buyer's ability to pay using DTI and other means of proving the borrower can in effect pay for the loan. You cannot have a Balloon payment requirement in the loan in the 3 deal per year rule but you can on the one single deal per year.

Let me know if you understand this any different as I got this from my attorney. Allot of people have been mentioning that the limit is 5 per year but that is not what my attorney says. 

[Curt Smith]

All too much "opinion" and too little actual fact.  Few lawyers actually know much about Dodd Frank a banking re-regulation bill (is my opinion).  :)

To add my own opinions:

- 3 per year per human being. No entities are allowed to originate loans post Jan 2014 unless it's your SD-IRA. This is my reading of the regs.

- Lender must provide an appraisal at no cost to the borrower.  Yup I read this in the statute.  But I seem to be charged for the appraisal.  Yet I hear of no investors doing seller financing doing appraisals.  Seems business as usual, picking selling price out of thin air.  IE the reason why DF was written...

- "seller financing must not be a mater of normal course of doing business".  My "opinion" is that DF intended to do away with investors originating loans to occupants all together.  Thus they wrote in that we may not do seller finainced loans year after year.  The 3 number I feel is ment to allow an owner to sell their own residence and a few vacation properties, not for investors to run a rail road train through those clauses.

Mind you,  my wife and I do rent to own and seller financing as a prefered deal type.   I'm working in the edges of DF like many folks.  I feel my opinions above are what the authors had in mind.   So I'm hoping the recent effort to amend DF for seller financing works its way through the legislative process and loosens things up.

Just wait for case law.  Some state's banking dept will string a few investors up and then we'll know more about what we can and can't do.