Seller Financing...A Thing of the Past?

With the ton of new laws and regulations happening in 2009 and 2010, you may have missed the one that impacted seller financing!! Under the Safe Act, states were to pass legislation to ensure mortgage originators were properly licensed and registered with the state. That's good, right?! We want better educated and knowledgeable loan officers in our industry...

But what about private money financing? That is where the problem lies....now anyone that loans money for real estate purchases must be licensed by the State of Texas as a mortgage originator. No longer will the seller be able to simply carry the note himself/herself when the borrower cannot obtain financing through traditional loans.

There is an exception for seller financing your homestead, however!! So where your seller is selling her homestead, the law would allow for her to carry the note just as we always have.

I think we have over-regulated at this point. I really believe we could have protected our buyers by means other than cutting off a source of financing especially where we have so few options now. What do you think? Is this consumer protection or over-regulation?!

If you want more information on the new law check out our local HUD website here:

http://portal.hud.gov/portal/page/portal/HUD/states/texas

Have a great weekend everyone!

Paula Hester--Escrow Administrator DFW