If you sell your property on seller financing, you must comply with Dodd Frank restrictions on seller financing. These restrictions apply if the deal is a recorded wrap-around deal. Some experts say that a lease option is not a sale and that Dodd Frank does not apply. Other experts say it does.
If you sell to a buyer who is not going live in the property, Dodd Frank does not apply. This means the seller can require full payoff in fewer than five years and that the interest rate may be variable from the start. It means that the buyer need not consult with a mortgage broker and qualify financially.
However, if you sell to a buyer who will live in the property, Dodd Frank does apply. Seller financed sales come under three exclusions.
One Property Exclusion: If you sell only one property per year, and if the buyer will live in the property, the buyer is not required to qualify through a mortgage broker. But the interest rate for the first five years must be fixed. Thereafter the rate and payment may increase. No negative amortization loans are allowed. The law probably allows a five year balloon payment cash out, although the law does not state this explicitly. It is clear that the rate can go up after five years to a level which will compel the buyer to refinance. Only sellers who are individuals, trusts, or estates can take advantage of the one property exclusion. Corporations, LLC’s, and partnerships cannot rely on the one-property exclusion.
Three Property Exclusion: If you sell to a buyer who will live in the property, and if you sell up to three properties per year, the buyer must qualify through a mortgage broker. The interest rate for the first five years again must be fixed. Thereafter the rate and payment again may increase. No negative amortization loans are allowed. It is clear under the three property rule that the seller must give the buyer a 30 year mortgage, but it is also clear that the rate can go up after five years to a level which would compel the buyer to refinance. Sellers who are individuals, trusts, estates, corporations, LLCs, and partnerships can use the three property exclusion.
Dodd Frank treats the seller who is not an individual but is a builder differently. But the law does not make it clear what extra requirement falls on the builder who engages in seller financing. Dodd Frank says neither the one-property, nor the three-property exclusions may be used, although the law does not make it clear what additional limitations there are and under what terms a seller can offer seller financing. Presumably, the same restrictions used under the three-party rule would apply where the seller is a builder and not an individual. Or perhaps builders are forbidden to engage in seller financing. The Dodd Frank statute does not make this clear one way or the other.
Dodd Frank treats the seller who sells more than three properties in a year differently. But the law does not make it clear what extra requirement falls on the seller who sells more than three properties per year. Neither the one-property, nor the three-property exclusions may be used, although the law does not make it clear what additional limitations there are and under what terms a seller can offer seller financing. Perhaps sellers who sell more than three properties in a year are forbidden to engage in seller financing. The Dodd Frank statute does not make this clear one way or the other.
To complicate matters further, there is the SAFE Act, which may overlap with with Dodd Frank. Read the Washington DFI explanation here. And you should also read this article by the DFI.
I repeat: Dodd Frank and the SAFE Act as they pertain to seller financing are poorly written. Consult an attorney and a mortgage broker if you are selling on seller financing and if the buyer is going to occupy the home. You should not rely on this overview for legal guidance since I have not completely figured out this conglomeration of semi-indecipherable provisions.
Read the Dodd Frank rules on seller financing:
http://www.consumerfinance.gov/eregulations/1026-36/2013-30108_20140118
Read the Washington regulations on seller financing:
http://www.dfi.wa.gov/documents/seller-financing/residential-seller-financing.pdf
Read the following items for more information. You will see there is quite a bit of divergent opinion as to how it applies to seller financing.
http://www.realtor.org/topics/seller-financing/the-safe-act
http://frascona.com/dodd-frank-consumer-financial-protection-owner-financing/
http://www.ksefocus.com/billdatabase/clientfiles/172/4/1720.pdf
http://www.legalwiz.com/owner-financing-dodd-frank-safe-act/
http://files.consumerfinance.gov/f/201301_cfpb_final-rule_ability-to-repay-interpretations.pdf
Click here to sign up for my email list.
James Robert Deal, Broker and Attorney
Broker with Agency One Realty LLC
WSBA # 8103, DOL # 39666
425-774-6611, 888-999-2022
James at James Deal dot com
James Robert Deal, Attorney & Broker
Co-Broker Buyer Broker Agreement
James Robert Deal co-brokers with other brokers on complex deals. This is a buyer broker co-broker agreement.
JR-Deal-NewZ-2-8-2019
Eliminate traffic congestion. James Robert Deal managing broker. Become a real estate agent.
Home Renovation Can Cost A Lot
Reality check: Don’t fall for these TV home renovation fibs Kitchen and bathroom remodels can cost more and take longer than HGTV shows lead you to believe. · by Sharon Salyer · Saturday, January 26, 2019 These before-and-after photos of this Edmonds...
Funny Mockery of Ineffective Government – From An Opponent of Single Payer
From James: Some points are valid. Some are not. But this is well written and sometimes funny. One of government’s problems is that elected officials are being bribed by corporate money. They need vast sums to get elected, so they take the money. And that appoint...
IRS Provides Clear Test on How 20% Deduction Applies to Rental Income, Exchanges
Real Estate Calculations Every Investor Should Memorize
The Top 8 Real Estate Calculations Every Investor Should Memorize by Andrew Syrios | BiggerPockets.com https://www.biggerpockets.com/renewsblog/2016/01/13/top-8-real-estate-calculations Despite what many of us math-allergic folk would prefer, real estate does involve...
An additional inspection can cut short the time for the original inspection
An additional inspection can cut short the time for the original inspection QUESTION: I’ve always been under the impression that when a buyer sends notice for additional inspections then the initial timeframe is void and buyer only has the additional timeframe to...
Ten Mistakes Investors Should Avoid
10 Lethal Mistakes to Avoid on Your First Real Estate Investment by Chad Carson | BiggerPockets.com https://www.biggerpockets.com/renewsblog/2016/03/22/10-lethal-mistakes-avoid-real-estate-investment You may have heard that your first real estate investment is the...
How to Make Earnest Money Non-Refundable
Click here if you are having trouble viewing this message. Weekly Membership Newsletter JANUARY 8, 2019 • Stay Connected! QUESTION: I have been asked a few times about non-refundable earnest monies. If a seller, who is a builder, is requesting that earnest monies be...
4 Different Types of LLCs and the Ways They Pay Taxes
4 Different Types of LLCs and the Ways They Pay Taxes by Scott Smith | BiggerPockets.com https://www.biggerpockets.com/renewsblog/different-types-of-llcs-and-the-ways-they-pay-taxes/ The following is meant for informational purposes and is not legal advice. For...
Why I Walked Away from a 118-Door Apartment, 10 Essential Real Estate Team Members & What to Do When Your Tenant Gives Notice
Support Our Sponsors: For Accredited Investors Only. Syndicator of multifamily investments, Ashcroft Capital. Co-founder, Joe Fairless, BiggerPockets podcast guest episode #227. InvestwithAshcroft.com FORUMS BP BLOG PODCAST December 2, 2018 Newsletter LATEST POSTS...
Helping Other Brokers
I am a real estate broker and a real estate attorney. I help buyers, sellers, and other brokers throughout Washington. Call me at 425-774-6611 when your purchase or sale involves legal issues. I can often quote a flat fee payable at closing.
Home Inspection Questions
What Buyers Should Ask After a Home Inspection October 9, 2018 After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move...
Seller-Financing Restrictions Under The Dodd-Frank Act – Barnes Wallace
The Dodd Frank Act imposed regulations on seller financing. If the buyer will live in the property, there are restrictions which apply. If the buyer will not live in the property, the restrictions do not apply. The restrictions are complex. Consult an attorney.
Door Knocking to Find Real Estate Sellers
29 Door Knocking Resources for Successful Lead Generation Posted by REDX January is the perfect time to door knock. Most people wait until the holidays are over to list their home, and more homes are listed in January than any other month. This presents a once-a-year...
Radio – 9-16-2018 8 PM Eliminating Traffic Congestion 9 PM Buying Real Estate in Partnership – James Robert Deal – Attorney Broker
JR-DEAL-NEWZ-9-16-2018 WASHINGTON POLITICS JAMES ROBERT DEAL, BROKER, ATTORNEY, ENVIRONMENTALIST, AMATEUR MUSICIAN Radio Program – Sunday, September 16, 2018 www.JamesRobertDeal.org/Radio 8:00 PM Politics: How to eliminate traffic congestion and take half the cars off...
How To Choose A Domain Name – by Saul Klein
Choosing Your Domain in the Age of Dot ANYTHING Written by Saul Klein Posted On Friday, 14 September 2018 13:00 · https://realtytimes.com/real-industry-news-articles/item/1019999-choosing-your-domain-in-the-age-of-dot-anything As the Internet continues to...
Mistakes Sellers Make
5 Mistakes Home Sellers Make Written by David Reed Posted On Friday, 14 September 2018 21:56 https://realtytimes.com/consumeradvice/sellersadvice/item/1020039-5-mistakes-home-sellers-make?rtmpage= There’s no shortage of advice for home buyers. Getting approved for a...
Buy Real Estate In Partnership
If you do not have enough income to qualify to buy a home, join together with several others. But a larger home, big enough for several families. With multiple incomes you can qualify. If you want privacy you can jointly buy a tri-plex or a four-plex. These can be bought with an FHA loan with only 3.5% down.
Small 5G Cell Towers in Neighborhoods Reduce Property Values
CITY COUNCIL DENIES APPEALS OF CELL TOWER INSTALLATION Sam Catanzaro , Santa Monica Mirror, August 31, 2018 Wireless carrier Sprint wants to install a mini cell tower on this street lamp on 18th street. Photo: Sam Catanzaro. Residents protest installation of...
15605 Cascadian Way Bothell WA
15605 Cascadian Way Bothell Washington. $430,000. 3 bedrooms, 2 bathrooms. Buy on FHA Rehab Loan. Hold long term. Eventually sewers may be extended 400 feet, and then two homes, two duplexes or five townhouses can be built. James Robert Deal, Attorney and Broker, 425-774-6611.
Cell Towers Reduce Property Values
Survey by the National Institute for Science, Law & Public Policy Indicates Cell Towers and Antennas Negatively Impact Interest in Real Estate Properties 94% of respondents said a nearby cell tower or group of antennas would negatively impact interest in a...
Reciprocal Easements by Prescription
Reciprocal Usage Easements? What is the Purpose? Many buildings that were constructed prior to the 1960s lacked adequate parking, and/or even on-site common usage with for ingress/egress of automobiles. In property law, ingress/egress referred to rights of a person to...
There may be a short statute of limitations on your credit card debt
Shortening the Limitations Period on Credit Card Collection Lawsuits Jon Sheldon August 6, 2018 Print/Download Email link to this article CONTENTS · Which Statute of Limitations in a State Applies to Credit Card Collection Lawsuits · Which State’s Statute of...
The Downside of Smart Homes
The Downsides Of Selling A “Smart Tech” House Posted on August 4, 2018Natural Living · · · · · · · Like By Catherine J. Frompovich Listen to Article Will your “smart home” become a true headache and liability when you...
Cancelling, Restructuring, Extending, Deferring, Rehabilitating, Consolidating Student Loans
Student Loan Repayment Rights: Consumer Debt Advice from NCLC Joanna Darcus August 2, 2018 Print/Download Email link to this article CONTENTS · First Identify What Kind of Loan You Have · Rights to Cancel Your Federal Student Loan · How to Reduce...
Where Americans Move To – Where they Moved From
Just a few years ago, experts indicated Americans (especially young Americans) were more interested in a different lifestyle than previous generations. Instead of owning a house in the suburbs, the new American dream consisted of renting an apartment in the city....
Selling FSBO Can Cost Sellers A Lot Of Money
Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think Posted in Economist Commentaries, by Amanda Riggs on July 9, 2018 385 Some homeowners opt to sell their residence without a real estate agent to get around paying a commission and make more...
Renew the National Flood Insurance Program (NFIP)
RENEW FLOOD INSURANCE BUT QUIT SELLING NEW COVERAGE AND QUIT BUILDING NEW HOMES IN FLOOD ZONES SEA LEVELS ARE RISING Can't read or see images? View this email in a browser Have you taken action yet? Time is Running Out Dear Emelyn, The National Flood Insurance Program...
Underwater Properties – Due to Climate Change
Climate Change Will Force the Poor From Their Homes Low-Lying towns and Homes in Washington will be affected too Alamy This story originally appeared on CityLab and is part of the Climate Desk collaboration. It’s no surprise that a list of places most at risk from...
18809 65th Place W Lynnwood
18809 65th Place West Lynnwood WA 98036. This house has “good bones.” It needs fixup, cleanup, and your love.
Co-Brokerage Listing Addendum
As both a real estate attorney and a real estate broker, I co-broker with other brokers, helping them to take more listings and service them better. This provides better service for sellers.
Call A Real Estate Attorney BEFORE You Buy or Sell
Call a real estate attorney BEFORE you buy or sell property. Call Attorney James Robert Deal at 425-774-6611. In many cases I offer a flat fee, payable at closing out of escrow.
How Much Is Your House Worth?
What is your Washington home worth? Click here to find out.
JRDeal-NewZ-12-13-17 CDC Manipulated Results Anthrax Vaccine Sickens Soldiers
JRDeal NewZ JAMES ROBERT DEAL Political Activist - Real Estate Attorney - Real Estate Broker 425-774-6611 December 3, 2017 Read Online at: https://www.washingtonattorneybroker.com/jrdeal-newz-12-3-2017 DR. THOMPSON OF THE CDC ADMITS TRASHING DATA IN 2004, REVERSING...
Puget Sound Market Prices Up
Home prices in Seattle have doubled over the past five years.
Questions To Ask Before You Buy A Home
Questions to ask before you buy a home.
Prince Did Not Have A Will – Do You?
Prince died without a will. Do not make the same mistake.
The Foreclosure Train Rolls On
Private corporations such as Loan Star and Caliber bought thousands of mortgages. The government pays them to modify mortgages, but they are quick to foreclose. They invest in high value instead of low value homes. They should be required to serve the interest of the local neighborhood as are banks. They should be regulated as banks.
Buy This Book – Chain of Title
Chain of Title How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud Purchase hardcover — $27.95 Available: April 2016 Hardcover 6 1/8 x 9 1/4 , 400 pages ISBN: 978-1-62097-158-1 Also available as an e-book David Dayen David Dayen is a...
You Need A Lawyer When Doing A Modification
You should be represented by an attorney when you are modifying your mortgage. Servicers break the rules.
Mortgage Modification Successes
Most of our clients are people who tried to modify their loans on their own and failed. Mortgage modifications are tricky. There are procedures which must be followed. When you do something wrong, the servicer does not tell you what you are doing wrong. The servicer...
For Sale By Owner
James Robert Deal, Attorney and Broker, assists for-sale-by-owner buyers and sellers. Call 425-774-6611 or 888-999-2022.
Banks Losing Right to Require Arbitration
CFPB may allow consumers to sue banks and file class action cases. Banks will not be able to hide behind mandatory arbitration.
Bothell Real Estate Attorney
I am a real estate attorney serving Bothell, Washington. Contact me at 425-771-1110 or 888-999-2022.
Real Estate Attorney And Real Estate Broker
James Robert Deal is both a real estate agent and a real estate attorney practicing in Lynnwood Washington. If He is your broker, he does not charge extra for legal work related to your transaction.
Author
What To Serve A Goddess When She Comes For Dinner Welcome To My Book I highly recommend it. I had a lot of fun writing it. My book has 464 page book. It is 8.5″ x 11″ in size. It weighs three pounds. It is a beautiful book. It comes autographed. I can autograph it...
Buyers With a Good Down Payment But Poor Credit
If you are a would-be buyer who has a good down payment and good income but poor credit, I am willing to help you buy property on a lease-option or contract basis. James Robert Deal, attorney and broker. 425-771-1110
Seeking Lease Option and Contract Sellers
Seeking Lease-Option and Seller Contract Sellers Open Phone Line to Brokers, Buyers, Sellers 425-774-6611 - 888-999-2022 I am working with several buyers who have strong income and good down payments but who have bad credit and cannot get financing. These buyers...
Let Freedom Ring – Song
Let Freedom Ring – a song by vaccine rights attorney Allan Phillips.
