Have you heard of the SAFE Act?
If not,
You will want to read below on how this affects you as a REALTOR®.
The SAFE Act requires all loan originators to be licensed with the Nationwide Mortgage Licensing System through state law.
This will require that some seller financing and any private financing must have a licensed originator within the state of which the property is located.
Sellers are only able to offer seller financing when the residence they are selling is their primary residence, which falls under an exemption. Sellers are now able to sell up to three properties each year with seller financing and not be in violation of the SAFE Act, a summer 2011 update to the Act.
All borrowers should work with licensed loan originators therefore if private financing is involved in the transaction that private financer must also be licensed within the state the property is located.
If there is a question about whether or not a person is acting as a loan originator, always look from the perspective of the buyer, to understand if that individual from the buyer’s view has been negotiating terms of the loan with them.
As a REALTOR® be sure that if you refer a loan originator to a client that they are licensed within the state. In addition, do not act as a go between with the lender and your client on terms of the loan, in that instance you could be seen by the buyer as an originator yourself triggering a need to be licensed under the law.
Penalty for violation of this law is a misdemeanor and any person who violates a cease and desist order is guilty of a class B felony.
Excellent Blog! I certainly like the layout and the theme. The information is also excellent and I look forward to coming back again later on.
This law is under a lot of scrutiny as of now and should be due to the fact it doesn’t completely do what it was intended. Since I work with a lot of REALTORS I try and give them the parts they need to know. Nothing in the law stop them from doing their jobs in negotiating a purchase and sales contract. What is being controled is their ability to speak with any buyers about the terms of the loan they are getting for the purchase. The terms of the loan are to be negotiated only between a licensed loan originator and the borrower. Sellers are only able to take back paper on a transaction if they fall within the primary residence exclusion. I believe it will take time to sort out of all of the issues surrounding this but for the moment agents need to be weary when suggesting to sellers that they should offer to take back a mortgage on a property. From the eyes of the buyer is how they are evaluating these cases and if the person the buyer is negotiating loan terms with they need to be a licensed originator or fall within a current exclusion.
Well my opinion is that sellers can not offer private financing unless in your question you said vacant land. There is a requirement that the buyer is buying property they intend to reside in so in that case since the buyer is not residing in vacant land the law does not apply and they seller may issue financing. This law applies to buyers buying property they plan on living in, also this would include vacation homes but not investment property. So sellers have to be careful what they are selling and what the buyer is planning on using the property. So this really affects builders who offer seller financing they will have to have a MLO on staff to negotiate the loan terms with the buyers.
You are correct. I attended a meeting of the banking commission for the NH Bar association and we had the opportunity to listen to and ask questions of the commissionor and legal counsel for the NH banking commission so that and a lot of self research tells me that the way this is being enforced and viewed is from the buyers eyes. Also if you read some of the answers posted at the HUD website they enforce that point of view. I am very happy to help you out I did this flyer originally for my local seacoast board of realtors when as co-chair of the affiliates committee it came to my attention some realtors had not even heard of the SAFE act or NH’s version of it so we are trying to start educating the public which I find when everyone is informed it makes all of our lives easier. So please take my comments from NH point of view since that is my area.
no one has commented -but seem to impy= that commercial property and land is exempt. Is this specific to the law?
time to read it….
This act is specfic to residential property and it has to be a place the buyer will use as a residence. Commercial and investment property is not applicable.
Now that the Dodd Frank Bill has passed that allows three seller financed sales in a 12 month period do we go by the state safe act or by the federal act?
While in the State must follow the state until it modifies with the Federal. The Federal Act is just requireing states to comply with their model recommendations and they are being reviewed on a per state basis.
I would advise you not to give any estimated payments. You could refer them to their lender or there are several could mortgage calculator website out there so you could refer them to those sites. This is based on how NH has enacted their version of the safe act based on the federal requirements. You will need to check with your own state.