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Updated almost 7 years ago, 01/18/2018
Dodd Frank/Owner financing
I see owner-finance deals everywhere. Do people just not know/care about Dodd Frank? Am I missing some great loophole that's allowing people to act as a lender?
Disclaimer: I didn't even know Dodd Frank was a thing until I had a potential owner-finance deal fall in my lap. That's when I researched it.
@Leather Nix The Dodd Frank act doesn't prohibit doing a seller-finance deal. It just puts a lot of stipulations on them. I am not an expert in Dodd Frank however, but there are some people on this site who are such as @Brian Gibbons. Also, there is a lot of talk about either changing that law or getting rid of it.
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There are folks hiring a RMLO Reg Mortg Loan Originator, to underwrite the OF Owner Financing buyer to CONFORM to the ATR Ability to Repay Rules of Dodd Frank, and enforced by the CFPB Consumer Fin Protection Bureau.
Interesting what is happening in Wash about the CFPB right now. Elizabeth Warren MA is fighting a tough fight about who runs the CFPB, and Pres Trump is calling her "Pocohantas" because of Indian heritage.
I suspect as @Shiloh Lundahl stated there are changes afoot.
See cnbc
https://www.bing.com/search?q=cnbc+cfpb&form=EDGNTC&qs=PF&cvid=153a460fdf4944e8aa7c445c4f50f268&cc=US&setlang=en-US
Oh, man! Dodd-Frank has caused me more headaches recently. I'm trying to buy an oddly situated house using traditional/FHA financing... good luck! There's a bunch of effects to the Pocohantas bill, not just owner financing. (Sorry guys, just joking there... calm down)
Thanks everyone. I knew it passed the House, but would have to get through the Senate. I heard about the Pocahontas thing, but didn't realize all that was in reference to Dodd-Frank. I'll have to look it up.
In my reading, I was under the impression it was really hard to pull off owner-financing. If it survives, I'll look more into how to get around it. Hopefully, it won't survive lol.
I just thought it was crazy because I'm still seeing a lot of owner-finance. Granted, I'm in a rural area, so it may not be enforced much here. Some are just regular people, but some are clearly investors.
I'm currently buying a property that is in contract for deed. The buyers are living in the house and have not made a payment in over year. The seller lives out of state and is tired of dealing with them. I talked to an attorney and he said the contract is a landmine and the courts will favor the homestead buyers. So I discussed with the attorney a strategy in which he gave sound advice. I approached the buyers and let them know I was taking the sellers position and they will be dealing with me (the seller told me she never wants to deal with them again and asked if I can handle everything during the transaction). I told them according to the contract, he is in default and needs to cure the contract with in 15 days or I will be legally enforcing the contract. Then I offered an alternative. If he wants to sign a release of contract, I will forgive his debt if he vacated the property within 30 days. On top of that, I will pay him $1,000 after he leaves pending an inspection to insure he does not damage the house. He agreed. Currently, I'm waiting for the attorney to draft the release. Fingers crossed, things can go any direction at this point.
I learned a lot about contract for deeds after talking to the attorney. Those things do not favor the seller at all.
@Leather Nix, one thing I don't see mentioned on this thread, is that a single owner finance deal shouldn't be as onerous as you may think. It's my understanding that until you do three deals in a twelve month period, you are not actually bound by Dodd Frank. I see that you are in TX, and if your deal is there as well, there's a great underwriter that can keep you compliant. I use Texas Pride Lending on any TX deal, not only for compliance, but to vet the borrower which is totally in your best interest anyway.
The level of racism in this thread shows a lot of ignorance.
@Account Closed
No racism in this thread. The reference to Pocohantas is the fact that Warren claimed Indian heritage to gain educational preference and political deference. Trump is calling her out because she has no Indian heritage. I consider Warren's use of a minority group for personal gain, ignorant and shameful.
@Vince Mayer The racist part has to do with using a real person's name for his political gain. It is as inappropriate as calling him Adolf because of his record of discriminating against African Americans and his German heritage.
I mean he is referring to someone who had her husband killed by English people. Was kidnapped by English people. Had "extraordinary courteous usage" by English people. Was "married" off by and to an English person when her father did not give a ransom as fast as it was demanded. Even when she died at 21 it was most likely from being around the English.
It is also very important to understand many people believe they are part native American when they are not. Cherokee is actually one of the most common wrong identifications in the United States.
Back to the original post, suspect Dodd Frank did just the opposite, create more seller lending, by putting constraints on the secondary market, loan originator compensation, the list goes on.
@Brian Gibbons- Do you know if that’s true that Dodd-Frank doesn’t apply unless you are doing 3 of these deals a year?
I’m following eagerly as I hope to purchase properties and offer them as lease to own.
TX also has a law against rent-to-own. However, many people still even try to do that. I even know a real estate agent who basically does rent-to-own in TX. I wouldn't try it in TX though. Seller finance...yes.