False Rumours on New Law Affecting Owner Financing

I’ve received a number of emails from people claiming that House Bill 1728 will eliminate owner financed deals to once every 36 months.

This is patently FALSE.

Become an informed citizen and read it yourself:

http://www.govtrack.us/congress/bill.xpd?bill=h111-1728

This bill aims to include owner financed deals within the definition of “Truth in Lending” law. I’ve always instructed in my courses and seminars that you should comply with Truth in Lending, which requires just a few simple disclosures.

The bill also would, in theory, make a person who sells a home a “mortgage originator”. This would require compliance with RESPA, which I’ve always instructed in my courses and seminars that you should comply with anyway.

Finally, the bill would require that you actually qualify your buyer. It prohibits, “lending without due regard of the mortgagor’s ability to repay”. Duh! Only a fool would put someone in an owner financed house deal without checking their income, debt and credit.

All in all, there’s nothing to worry about here for investors, it’s just a matter of compliance with some federal rules and a couple of disclosures.  If you don’t want to get licensed as a mortgage originator in your state, then have someone who IS licensed originate your loans and charge his fee to your buyer.

Any comments or questions are welcome.