- Contact your state representative and ask to have seller financing de-coupled from the following bills: HR4173 and the ‘Restoring American Financial Stability Act of 2010’.
There is currently one bill in Congress and a companion bill in the Senate that threaten the very fabric of American property rights. While there are many good benefits for the public included in these bills there are dangerous pitfalls as relates to the consumers this bill is intended to protect. Real estate investors nationwide are seeking assistance in de-coupling the individual taxpayer from this legislation that is intended for oversight of institutions, and we need your help to get the word out.
Don’t Judge A Book (Or A Bill) By Its Cover
The bills are HR 4173, the Wall Street Reform and Consumer Protection Act, and the Senate companion bill, the Restoring American Financial Stability Act of 2010. These sound great don’t they? Wall Street Reform, Consumer Protection and American Financial Stability are warm and fuzzy sounding names. You’ve probably heard the old adage, “you can’t tell a book by its cover,” right? Well, you can’t tell a piece of legislation by its name either. Both bills literally contain thousands of pages.
I had the opportunity to participate in National REIA’s 3rd Day On the Hill in Washington, D.C., where these bills were brought to my attention. This important event was sponsored by the National Real Estate Investors Association, who represents over 40,000 small businesses in 41 states. Of concern to both investors and average Americans is that we are all caught in one big net directed at mortgage regulation. You, me, your parents, your grandparents…everyone you know would, upon passage of this legislation, be required to become licensed mortgage lenders if we decide to sell any property we own with owner financing. Suddenly, if your parents own a property free and clear and decide to let you buy it from them with monthly payments, they would need to be licensed as a mortgage lender and you would have to qualify for the loan as you would with any other lender.
Many properties, such as condos, mobile homes or land, don’t qualify for bank financing but would now have to. Why? Because purchasing from individuals by using a privately held note would no longer be legal. After the tumultuous real estate market of the past few years, many of today’s buyers can’t qualify for a traditional mortgage and count on seller financing. This would no longer be an option for millions of potential homeowners.
Threats To Private Property Rights
HR 4123 poses the following threats to the security of private property rights, and to the stabilization of the housing markets in many communities:
- On its face, this legislation appears to merge individual taxpayers who accept installment payments for their equity with banking institutions, mortgage brokers and originators who sell money for a business.
- When a seller offers to sell their own property to another and accept payment for equity, there is no loan, but rather terms of a sale.
- Banks lend money that the borrower can then spend as they see fit.
- In the current market, if there were no seller financing, there may be no financing at all in many communities.
- Millions of soon-to-be-retirees who have worked a lifetime and prepared for retirement by investing in properties that can be sold in exchange for installment payments providing supplementary income will be negatively impacted by this legislation. The legislation limits individuals to only one transaction every 36 month. Imagine trying to liquidate a large portfolio at this pace.
- The dramatically increased number of individuals and families who are going through foreclosure may only retain the ability to buy a future home for their family by finding a seller amenable to accepting an installment sale
- A homeowner who may have sold their previous home with seller terms has now lost their job and is about to fall behind on payments. However, they have a little vacation cabin. In order to sell quickly, the cabin has to be sold on terms to provide enough income to keep the homeowner current on their present homestead. This scenario would run afoul of this legislation as it is currently written.
- While this legislation regulates large organizations with teams of legal people (consider the contract language that is being used in the resale of foreclosed homes being sold by banks) it puts the individual taxpayer at a tremendous disadvantage on both the selling side as well as the buying side, thereby making homes less accessible to many people.
- Lastly, many people in the United States live in manufactured housing for which there are basically no loan products available. Once the manufactured home reaches a certain age, although there is still remaining useful life in the home, no loans are available for homeowners. How will these properties be bought or sold if not with a seller accepting installment payments?
Specifically, the language lifted from failed HB 1728 and added to these bills, the former, Section 101, 3, (E) does not include, with respect to a residential mortgage loan, a person, estate or trust that provides mortgage financing for the sale of 1 property in any 36 month period, provided that such loan:
(i) Is fully amortizing
(ii) Is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay
(iii) Has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and life-time limitations on interest rate increases, and meets any other criteria the Federal banking agencies may subscribe
- Contact your state representative and ask to have seller financing de-coupled from the following bills: HR4173 and the ‘Restoring American Financial Stability Act of 2010’.
I invite you to follow up with your Senators (before the Senate bill is voted upon) and Congressmen (regarding an amendment should it pass the Senate) with emails, phone calls, letters and personal appointments when they’re back in our home states. The bill, as written, has already passed the House and will soon be voted on by the Senate. We need your support and the support of every property owner you know.
What did we ask for? The answer: “to have seller financing de-coupled from these bills.”
Surprise! Your Legislators WANT To Hear From You!
You may be surprised to learn how accessible and interested many of our legislators in hearing from their constituents. Did you know that, with an appointment, you can see almost any of your local House Representatives or Senators? Possibly more difficult in Washington, D.C. than while they are at home in your state but, even then, if they don’t have the time to speak with your personally, you can make appointments to meet with their aides.
Everyone we talked with about these bills seemed genuinely concerned and a bit alarmed at the harm this one section could do to the general public. They were concerned for the “Mom and Pop” operations out there who may have paid off some rental properties for their retirement and now, with the new laws, would no longer be able to sell with owner finance securing themselves income during retirement. The general consensus was that this could not have been the original intention of this bill. Most termed the situation an “unintended consequence”.
I’d like to close with a quote from my friend Tom Zeeb, president of Capitol Area REIA, “Never ask how law and sausage are made.” Unfortunately, we need to know what’s in the laws are legislators are voting on. The good news is that we can influence the outcome with our voices and our votes.
Your Call To Action – Make A Difference!
You can locate contact information for your Senator at http://www.Senate.gov and you can find your Congressional Representative at http://house.gov. Remember, we are asking them “to have seller financing de-coupled from the following bills: “HR4173 and the Restoring American Financial Stability Act of 2010.” Contact them today!
In closing, I thank National REIA for their legislative efforts on behalf of our industry. I also thank Central Florida Realty Investors Association for sponsoring Charles Fischer, CFRI President, and myself to represent Central Florida. Finally, I thank the 40-plus investors in attendance and their home REIAs for sending them. We were in Washington, D.C. working with our elected legislators in both the House and Senate to protect American property rights, and now we need your help. Take action today!
To your success…
Augie Byllott
- We need your help to to have seller financing de-coupled from the following bills: HR4173 and the ‘Restoring American Financial Stability Act of 2010’.
Mike,
An estimated 6 million Americans own a property other than their primary residence. 40% of non-owner occupied properties are mobile homes for which almost no financing exists. In Florida alone there are over 500,000 mobile homes. For many of these mobile homes there is no financing available; lenders see no value in the collateral although there is remaining utility. Millions of self-employed or credit challenged families cannot and will not qualify for bank financing even though they are good candidates for home ownership when seller financing can be made available.
There is more to this issue than meets the eye.
Thanks for thinking about it.
Augie
Augie,
While I believe we need some regulation of the mortgage industry especially if the government is going to be backing or buying the mortgage, there is no need for the government to interfere in transactions between private parties. Let alone requiring people to get licenses to do so. This is just plain un-American and a serious attack on private property rights.
Thank you for assisting in these efforts to represent us as investors and Americans.
http://www.youtube.com/watch?v=WkjiWnSMm3w&feature=youtube_gdata
Here is a video on this topic.
Augie,
As a new investor I appreciate your diligence in lobbing for the private sector. I am a single mom and with the wages in the state of Montana what they are, I have had to look to other means to try to ensure my future and legacy. I chose real estate to be that vehicle. You can count on me to let my voice be heard. This would certainly hinder my plans for retirement as well as my childrens children. Thanks for the info.
Thanks for helping spread the word Kim. When we met with Senator Bill Nelson’s legislative aide I shared with him how we recently owner financed a home to a single mom because it was cheaper than rent for her. Her husband abandoned them and without his income she couldn’t have made it otherwise. I was happy to help her and she is now a first time home owner. Congress and the Senate need to understand that these are real people’s lives they are playing with. I’m Florida we have 500,000 mobile homes many of which cannot qualify for any type of financing on resale. It there is no seller financing there will be no financing.
Someone asked me about simply getting a license and my response is that even if it I was ok with the idea to seller finance my properties, my mom who’s nearly 80 owns a condo and a coop which won;t qualify for financing and is it likely she’ll be able to pass a broker’s exam. This legislation reflects just how far our leader have separated themselves from those who put them in office.
As a new investor I hope you’ll come back to check out our articles, videos, tips and techniques for the new and experienced investor.
To your success…
Augie
All over the internet and in conversations, I see and hear reason after reason how wrong and unconstitutional it is for a government body to tell Americans how they can or must sell something they own. I have not seen nor can I think of one reason why anyone would support this (apart from banks).
As we urge our representatives to not support this, it would be nice to be able to speak directly to and refute any perceived value this has to them. I just can’t think of it.
Augie,
Thank you for bringing this to our attention, and making sure we have a voice.
I plan to write not only my local congress members, but several others as well.
One such, who shall remain nameless because it’s not appropriate to name him/her here, who just so happen to buy a home for their family from me, with seller financing. (ins’t that funny, and yes, they already have several emails from me to their personal email about this and have assured me they will vote “no”, so we have one down.)
I would also,if you don’t mind, post a link this week on my blog and send out your info to my list, this needs our attention!
If you have any blog articles for sharing, I’d be more than happy to make you a guest blogger and post your article with credits and links on mine as well. Can’t hurt to have more folks here.
Not a ton of reach, I invest to make my living, just sell a few things online for fun more than anything, but can reach out some.
Also, thank you, I live in Florida, and have sold, and plan to continue to sell all types of housing carrying paper, plenty of mobile homes in that mix of course.
I’d hate to be forced to lease option everything, because buyers really want ownership.
Then again, I could see a gung-ho govt attorney coming after those as well.
Keep up the fight, and thanks, we should all do our part to help ourselves here………..a lobbying group for investors has been a long time coming.
If you need someone with time to help with that effort, don’t hesitate to ask, I have plenty to spare these days and frankly, quite a bit of political experience working on campaigns for some 30 years.
Take care,
BikerJim
Hi Jim,
Thanks for joining the effort. It’s ironic that you sold a legislator’s family member a property with seller financing. There is a lot at stake in this legislation. Senator Nelson’s office is sending out a prepared response that addresses everything except the consequences to the individuals who will be harmed should this bill become law (unless amended). We need to press the issue of de-coupling seller financing from both the Senate and House bills. I’d be happy to be a guest blogger and you are welcome to post a link on your blog. In addition, please feel free to sign up for my newsletter The Intellectual Capital Report at http://www.PACTProsperity.com I’m using it and this blog to keep folks informed on what’s going on.
To your success…
Augie
Is this like the government wants everyone to become a licensed broker for their own property? I think there needs to be a clear distinction between private parties selling or buying property and the commercial side. Merging it or creating a confusing licensing system will not be helpful at all.
Augie,
Property rights are something that we all need to cherish and preserve. Without the right to our property, we’re really slaves.
Augie,
I just found your website about this and am very concerned for I want to sell my house by owner. I have downloaded the letter and will mail it and make phone calls. Please let me know any new information.
Thank you
Patsy
Thanks for your help in spreading the word. I will continue posting updates here on the blog and you can also get email updates. Another source for information is my newsletter, The Intellectual Capital Report, feel free to sign up at http://www.pactprosperity.com.
To your success…
There’s no sense in making holding a note illegal. It just takes away seller’s options on terms. The government has no right to control what we do with the property we own as long as it doesn’t hurt anybody. Actually, carrying a note is a great way to help buyers get into a house they otherwise would not be able to get. I don’t see what’s so wrong with that. Thank you for bringing this information to my attention.
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How would the T-SAFE (Texas Safe Act) apply to my business if I am doing rehab deals using private lenders’ funds. My private lenders receive a good interest rate for the use of their funds and are provided with a mortgage, hazard insurance, lender title insurance and a promissory note (everything in adherence to the SEC guidelines).
What does the Texas version (stricter version) of the SAFE Act mean for me?
Although the main purpose is to protect consumers from abusive financial services practices, for me, I never think that this bill will become law.
Most of the SAFE Act interpretations I’ve read have suggest that for rehabbers borrowing private funds for investment property there is no issue. According to the attorneys I’ve spoken to the SAFE Act and HB 1743 are earmarked for the protection of owner occupants not rehabbers or landlords. I’m not offering a legal opinion here and would suggest you talk with a Texas attorney or your local REIA (Real Estate Investor Association) to learn about your specific State law.
Happy investing…
I’m glad I read this, I don’t really fancy having to sell my property and spend the rest of my days living in my summerhouse!
One of the most fundamental requirements of a capitalist economic system—and one of the most misunderstood concepts—is a strong system of property rights.