After a major financial or social disaster you can always count on somebody to comer along and advocate for some new drastic measure that unbalances everything. This is the case with a bill that has been approved by the House of Representatives and that is currently at the Senate. The name of the bill is HR 1728 “Mortgage Reform and Anti-Predatory Lending Act”. It amends the “Truth in lending Act” by specifying more restrictive rules for the originators of residential mortgages.
This bill is creating ripples of alarming comments in all real estate investor associations throughout the nation, particularly because, amongst many things, it limits the ability of an individual owner to owner finance one property only once every 3 years.
There are people who are already talking of possible ways to work around the obstacle and others who are advocating urgent lobby actions with senators so to remove of change the few sentences that effect private owner financing.
These are the types of transaction you would be restricted from doing: sell your own home with a land contract or with a mortgage held by you, doing any kind of installment sale of any kind of residential property. To do more than 1 owner financed deal every 3 years you would have to follow the complex requirements set forth in the proposed law, and maybe get additional licenses.
With this piece of legislation the US gets closer to Europe where NOBODY is allowed to owner finance ANY type of property. Only banks are entitled to issue loans and private individuals can only accept cash payment for their properties. If the bill passes the Senate, the US real estate market is going to change. Many creative exit strategies for sellers and investors will go out of the door and some markets will probably reduce.
In Europe today the real estate market is very slow because it is becoming more and more difficult to sell properties since the banks have tightened their already strict lending policies. The bill seems conceived to protect the weakest buyers and tenants, those who got themselves into dire straights because of poor money management and careless house purchases. You might watch out to the consequences it will have on the free open market.
Roberto Mazzoni
P.S. My friend Sam Bell made a much more extensive exam of the bill and the possible counter actions on his site http://sambell3rd.com/realestatementor/real_estate_financing/90/us-senate-seizing-control-of-real-estate-investing/
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Tags: HR 1728, International Real Estate, real estate, Roberto Mazzoni, “Mortgage Reform and Anti-Predatory Lending Act”
Tags: HR 1728, International Real Estate, real estate, Roberto Mazzoni, “Mortgage Reform and Anti-Predatory Lending Act”