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News for Real Estate Investors and Landlords — Seller Financing

Financing Strategies for Buyers and Sellers of Real Estate

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"Financing Strategies for Buyers and Sellers of Real Estate," is my newest book. It will release on June 1, 2015. Pre-publication discount pricing of $129 available for first 25 purchasers.  Immediate download of customizable lease-option form, and single family home addendum, when you finish check-out.  Link at bottom of this post to purchase. Regular price of book is $229. Topics include practical, legal, financial and income tax considerations for the following chapters: Seller Financing Using Mortgages Lease Options Bond for Title, Contract for Deed, Vendor's Lien Deed Wraparound Mortgages (Yes, They are Legal) "Hard Money" Loans Investment Clubs Bonds IRA...

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Attorney Exception for Seller Financing/Mortgage License

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Alabama Code Section 5-26-4(2)(d) contains an exception to the S.A.F.E. Act. It says the Act does not apply to: "A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator." The question, of course, is what is meant by the words "as an ancillary matter to the attorney's representation of the client..." HUD's...

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Seller Financing: New Info Makes Things Even More Complicated

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Here is a little background to today's post.  All mortgage loan originators must have a license. Owners who hold the financing when selling their property are considered mortgage loan originators. So, seller financing requires a licensed mortgage loan originator. Despite that, Alabama has something called the "Five-Property Exemption." It is also called "The Interim Rule." It says that if you seller-finance five or fewer properties in a twelve month period, you are exempt from the licensing requirements. The Alabama State Banking Department, which issued the Interim Rule on April 14, 2011, also said in that rule, "Please take notice that...

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Now I'm just ranting...

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In researching the seller financing issue, I ran across the following gem in the regulations on the subject. The regulation says: ("h) Prohibition on mandatory arbitration clauses and waivers of certain consumer rights. (1) Arbitration. A contract or other agreement for a consumer credit transaction secured by a dwelling (including a home equity line of credit secured by the consumer's principal dwelling) may not include terms that require arbitration or any other non-judicial procedure to resolve any controversy or settle any claims arising out of the transaction. This prohibition does not limit a consumer and creditor or any assignee from...

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Actual Regulation Regarding Seller Financing

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The regulation about the mortgage licensing exceptions for seller financing of dwellings is at 12 CFR Part 1026.36.  There are two versions of the regulation--one effective before 1/10/14, and one effective on 1/10/14. Both are addressed below. The regulations refer to a "person," and then tell you that "person" is defined in another regulation. Here is that definition of person: "(22) Person means a natural person or an organization, including a corporation, partnership, proprietorship, association, cooperative, estate, trust, or government unit."  You'll  need to know this to fully understand the regulation regarding the exceptions. The regulation that is in effect...

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