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Hello NSDREI Members and Friends,
Your first inclination may be to stop reading because you have already heard about the recent HUD proposal affecting seller financing. FIGHT YOUR INCLINATION: THIS IS CRUCIAL TO YOUR REAL ESTATE INVESTMENT BUSINESS, EVEN IF THIS IS NOT YOUR CURRENT BUSINESS STRATEGY. If you have already given your comments to HUD, then please pass this along to someone who hasn't! However if you haven't, please hang in there a little longer.
What is all the fuss about the FR–5271–P–01 SAFE Mortgage Licensing Act?In a nutshell, HUD is proposing to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. In other words, if you own an investment property you wouldn't be allowed to offer seller financing unless you became a licensed mortgage originator. If you wanted to buy a property from an investor with seller financing, the seller would have to become a licensed mortgage originator. This limits lending options and would likely prevent many transactions from taking place. This not only hurts investors, but the housing market in general. With the current tight lending and credit markets, we need more financing options, not fewer. For a housing market recovery, we need more transactions, not fewer.
The full proposal can be found here: http://m1e.net/c?81253658-lCm5k2jHHOl8A%405038918-gGcVJlABqcoRQ
What can you do?You can give your feedback. Tell HUD what you think! The deadline to give feedback has been extended until March 5th. The following information was distributed by the NAREIA and will assist you in your submission.
PLEASE SUBMIT YOUR COMMENTS TO HUD! We have very little time to flood this system with comments.
Follow these simple steps:
- To submit your comments directly, just follow this link: http://www.regulations.gov/search/Regs/home.html#submitComment?R=0900006480a6b033
- Complete the form providing required information and your comments and then submit
What do you say?Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own. Some ideas from others:
- bank loans are not available on some types of properties * the tight lending climate has made bank financing "out of reach" for many
- seller financing is an "age old" tradition based on private property rights
- these rules would prohibit even partial seller financing - i.e. a "seller second"
- according to HUD's "Residential Finance Survey" in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear
- an estimated 6 million Americans own a property other than their own primary residence
- an estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties
- 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing
- approximately 5% of homes in US are for sale or for lease... seller financing may be key to liquidating this inventory
The continued success of our industry, as we know it, is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.
Thank you for taking the time to understand and respond to this critical issue!
Best regards,
Eric
Eric J. Siragusa, President
NSDREI Association, Inc.
www.NSDREI.org
The following are some of the responses we have received from members and friends of NSDREI. We are sharing them with our readers in case you would like some additional information for your HUD letter.
I submitted my comments. Thanks for your interest in the matter and action in behalf of all us RE professionals. – MS, Carlsbad
Thanks for sending this out. After last month's meeting I searched and searched the NSDREI web site and the SDCIA web site, but couldn't find this link and gave up. I just gave my feedback and will send out a link via my Facebook page to the investors I am friends with. – BM, Vista
… I did voice my opinion as you and Eric have asked. Thank you for bringing this to my attention. As a victim of subprime mortgage layoffs, I’m closer to this topic than I want to be. – DD, Carlsbad
Thanks for the update! … This will be important for me as a licensed realtor and investor; I guess the time has come to gain more knowledge to be effective. – AW, Carlsbad
Here is the response I just wrote:
"As everyone should be well aware, it is extremely difficult to get any bank loans these days, and hard money loans are at very high rates: Usually 13-15% + up to 5 points up front. If this new rule is passed, it will make it impossible for millions of people to buy homes and investment property at all. By being able to buy and sell with owner financing, the industry is still chugging along, despite everything else going on. If this rule is passed, this industry will be strangled! This rule will absolutely kill real estate! Not only will it hurt individual home buyers and sellers, it will really hurt investors.
I am a real estate investor. I recently bought 16 houses, townhouses and condos here in San Diego. I hired a lot of people to help fix those places up, resulting in money circulating in our economy, plus I bought a lot of materials = more money circulating. Now I am renting them out, so I'm helping provide more affordable housing. My end goal is to sell these with owner financing in a few years, to people who probably can't get a bank loan, because hardly anyone can. They would end up paying the same as they would for rent, but would own their own place, and I would create a steady stream of income for myself, without having the headaches of renting and managing. Without having the option to sell with owner financing, I probably wouldn't have done any of this. There are many, many investors like me around. Why would anyone even think to take all of the money we are circulating out of the economy just when it needs it the most? Why would anyone even consider passing a rule that would further tighten up the real estate market, and economy as a whole? Please don't strangle us! Please let people continue to be able to buy and sell with owner financing, as there are no other feasible options at this time!
Whatever the benefits of this proposed action could possibly be, the far reaching negative impact will be much, much greater!" – AC, Vista
We also received a number of …
Thanks for the information. We sent in our letter.
If anyone has a letter they would like to share that may give others an example of what to say regarding this proposed regulation, please send it to
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