I’m all for reasonable consumer protections. I’m in favor of environmental regulations.
But these proposed regulations HUD is considering putting in place are absolutely ridiculous.
When I first read them, I thought it was a hoax.
Here are some comments about the proposed regulations made by Owen Irvine, economics professor at Michigan State University. Owens does research at the Federal reserve bank in Boston.
” I am a Professor of Economics with a Ph.D from MIT with specializations in Urban Economics and Banking. There are serious omissions in these regulations. One third of Americans live in rental housing. Most cities have thousands of small landlords who own less than 5 houses or duplexes. The market for these rental houses and small apartment buildings is currently severely hurt by the lack of any bank or Fannie Mae mortgages for these types of dwellings. The only way to sell them is with owner financing as part of the terms of the sale. THERE NEEDS TO BE AN EXCEPTION IN THE LICENSING REQUIREMENTS THAT EXEMPTS FROM LICENSING OWNERS OF RENTAL PROPERTIES SELLING THEIR PROPERTIES. In truth, no cash is involved in these deals. They do not pose any risks for the financial system. Landlords who buy run-down houses and older mobile homes and fix them up and resell them also have no other source of financing. Generally their retail buyers will not qualify for a mortgage.
Without seller financing, landlords will not purchase these older houses and mobile homes, which will lead to them being abandoned by their sellers causing further decline in the American Housing stock and neighborhoods. Please provide an exception for licensing these fixer-upper landlords also. HUD needs to understand that the poor depend on rental housing markets and be sensitive to them.”
HUD is attempting to require that ANYONE who provides seller financing have a mortgage broker’s license.
That isn’t providing consumer protection. All such a move would do is further weaken an already weak housing market.
What ever happened to free enterprise? Is free enterprise a thing of the past?
Have these regulators completely lost their minds?
I have a better idea for some new needed legislation. Let’s make it illegal to concoct stupid laws that no more help this country and it’s inhabitants than a blindfold helps a race car driver.
February 16th, 2010 at 8:01 am
This is terrible news. I’ve also posted similar information on Facebook. Seems no one really cares (then again, most of ‘them’ have no investment properties and do not understand what this really means).
House prices will fall. More homes will not be sold. The rich will get richer while the middle class will get poorer.
Of course, the bright side, a lot of our competition will go away so it looks like I’ll have to get my brokers license!
February 16th, 2010 at 11:03 am
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February 16th, 2010 at 1:35 pm
My suggestions: Lets make it illegal to have someone propose or come up with regulations who has never worked in the field of subject. Why do we allow those desk potatoes, who have no idea how real life works, tell us how to conduct business? Oversight, fine, but putting a knife to entrepreneurs’ throats? Looks to me someone is trying to help the “licensing” industry with it’s ever increasing annual fee’s and requirements.
February 16th, 2010 at 1:51 pm
Scott,
If you are referring to 24 CFR 30 -3400, I think you need to reread the rule. All it does is to say that sellers who finance will not be licensed as loan originators. The web chatter is completely misinterpreting 24 CFR Parts 30 and 3400 SAFE Mortgage Licensing Act: HUD Responsibilities Under the SAFE Act:
F. Individuals Not Subject to Licensing Requirements
Notwithstanding the broad definition of “loan originator” in the
SAFE Act, as noted in HUD’s Commentary, there are some limited contexts
where offering or negotiating residential mortgage loan terms would not
make an individual a loan originator. The provision in the definition
that loan originators are individuals who take an “application”
implies a formality and commercial context that is wholly absent where
an individual offers or negotiates terms of a residential mortgage loan
with or on behalf of a member of his or her immediate family.
Accordingly, this proposed rule would provide in Sec. 3400.103(e)(4)
that such individuals are not subject to State licensing requirements.
The commercial context implied by the taking of an “application”
is also absent where an individual seller provides financing to a buyer
pursuant to the sale of the seller’s own residence. The frequency with
which a particular seller provides financing is so limited that HUD’s
view is that Congress did not intend to require such sellers to obtain
loan originator licenses. Accordingly, this rule would provide in Sec.
3400.103(e)(5) that such individuals are not subject to State licensing
requirements.
February 16th, 2010 at 10:21 pm
In my opinion, This all looks like another opportunity for an army of lawyers to me. For example, if the rule is strictly exempting “…the seller’s own residence.”, it leaves too many doors open against seller’s who own but do not reside in a property. Quibbling over the nunaces of taking an “application” is another litigation waiting to happen. Simply exempting family members from the rule is also another dodge. This whole thing smells of “death by a thousand small cuts”. And furthermore, “what Congress intends”, is another litigation waiting to happen.
Is there a lawyer in the house who would like to assure all of us investors that we are indeed safe?
February 17th, 2010 at 12:00 pm
The government has always had it’s head up it’s #$^%@.
They think it was us investors who caused the housing crisis. It wasn’t, it WAS the government. It was the government that facilitated lenders to make unsound loans (which no investor worth their salt would take).
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March 4th, 2010 at 6:31 pm
We lost Millions of jobs due to failed regulation. Someone is going to have to pay for those sins. Who could it be?
March 6th, 2010 at 3:09 pm
For those who care about booms and busts, and whether they are inevitable or preventable — which should be all of us — I suggest reading Mason Gaffney’s “The Great Crash of 2008″ and “How to Thaw Credit, Now and Forever.” He points out that Homer Hoyt’s “100 Years of Land Values in Chicago,” published in 1933, tracked the five cycles that had occurred during that interval, and found 20 elements which virtually always appeared; Gaffney has added a few more. He shows the algebra, which brings in expected land rent (a), the interest rate (i), the expected growth in land rent (g), and derives the value of land, (V). If investors expect “g” to rise, they’ll pay high prices for land. For V to level off, “g” must fall to zero, which causes V to fall. “There cannot be a ‘permanent high plateau’ of land or stock prices, if “high” means based on high values of “g”. ” Buildings do not appreciate. Let me repeat that. Buildings do not appreciate. They depreciate, no matter what nonsense we permit our tax assessors to put online. What rises in value is land. (And the assessors typically undervalue it by large margins. Buyers do not, and neither do sellers.) Speculators do not speculate on buildings. They speculate on locations.
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May 25th, 2010 at 11:52 am
HUD attempt to make Owner Financing Illegal
SAFE Mortgage Licensing Act
Does anyone have an update on this issue? Have HUD issued the final rules?
May 25, 2010
May 25th, 2010 at 11:53 am
HUD attempt to make Owner Financing Illegal
SAFE Mortgage Licensing Act
Does anyone have an update on this issue? Have HUD issued the final rules?
May 25, 2010
Email: rsommer at wctc dot net
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