Skip to comments.No more owner financing for real estate.
Posted on 07/28/2011 9:52:58 AM PDT by Bill W was a conservative
The Federal Reserve Board on Tuesday requested public comment on a proposed rule under Regulation Z that would require creditors to determine a consumer's ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards.
The revisions to the regulation, which implements the Truth in Lending Act (TILA), are being made pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposal would apply to ALL CONSUMER MORTGAGES(except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans).
(Excerpt) Read more at federalreserve.gov ...
Quiet down now...it’s for your own good.
Quiet down now...it’s for your own good.
I’m not sure this is what this means. I don’t see the government telling individuals they can’t finance their own property. Then again, this may be the EXACT reason for this crap.
You've got one arm of government requiring them to make loans to people who can't repay; another branch requiring them to determine creditworthiness before granting a mortgage. If you'd get the government out of it, the lenders would do what comes naturally, i.e., ensure that no one gets a mortgage unless he can show that he stands a reasonable chance of paying it back.
Many probably don’t even know what this means.
A relative sold his house, providing the financing terms to the buyer. No banks or lawyers were involved just a notary for the contract.
It was a good deal for both of them. The buyer could’t qualify for a mortgage and the seller wanted to keep the loan interest as profit. He turned his old house into an investment pure and simple. He died a few years later and his widow continued collecting on the loan. The buyer eventually paid it off and she gave him title. She made quite a chunk of change off the loan.
Just look at the interest tables for a 30-year mortgage and you’ll see why they want to outlaw owner financing. The bankers don’t want the competition.
This bill represents crony capitalism and oligarchy.
Seemingly the objective of Dodd-Frank is to curtail financing on real estate transactions, forcing consumers who still can qualify and endure the process successfully to only have a limited number of large institutions as their options.
Without being fully enacted just yet, this massive Government package has insured the housing depression is now the new normal.
If there’s any remaining doubt that generically, government interference in the market destroys the market once taken to the conclusion governMENTALists want, this should be your proof.
And as posted upthread, they want complete control of the RE market so that nothing will be left undestroyed.
I owner-fiananced a property; I had no mortgage on the property myself. We did not use a real estate company. I hired a real estate attorney to review my standard form I pulled off the state website.
It was an very simple and fast transaction. I had 30% down from the buyer and felt rather secure as failure to provide proof of insurance or property tax payment resulted in default.
In 2006 I bought a 20 acre parcel with a house. I couldn’t finance that at the time. Put 40% down and paid off the 2-year balloon mortgage in 2008. Case closed.
Uncle Sam would stop me tomorrow with this plan I guess. So I am stuck with half, ten acres of prime vacant residential and cannot finance a buyer in my future I guess.
This govt HAS GOT TO GO.
The Fed is the consigliere and the enforcer of the banking cartel.
All transaction smust go through the banking cartels central clearinghouses to be preoperly monitored, taxed or forbidden.
Anything that isn’t expressly allowed is specifically forbidden.
Welcome to the New Amerika.
This is ridiculous - owner financing of a mortgages is a PRIVATE TRANSACTION BETWEEN TWO PEOPLE.
When is it going to stop?
Without owner financing I could never have bought my first home in 1992. I had recently been divorced and my credit had been messed up trying to get back on my feet. I put 15% down, the payments were less than my rent had been and paid off the the 8 year balloon a year early with a refinance.
The guy I bought it from was the father of a friend, it worked out well for us all - he no longer was dealing with the headaches of a tenant, I was able to fix my credit and he made money on the deal, just as I did when I sold it in 2003. Win Win all around.
When I owner financed my property, there was no government agency to get approval from. I don’t see how an individual that has no business liscense would ever get impacted.
I read an article from the National Association of Realtors that agreed with that assesment. I’ll link it if I find it again.
All rights come from the Government. The government giveth and the government taketh away. Submit or die.
Does Regulation Z currently apply to owner financing? My guess is it does not. Which would mean these revisions would also not apply to owner financed transactions.
You would have to look at the definition of creditor under Regulation Z.
Read the comments section.
Of course this will be applied to owner financing in time.
Let’s see now...
If we “require” (not “recommend”) creditors to “determine” (not “evaluate”) a consumer’s ability to repay a mortgage during its FUTURE term, then don’t we also “require” the government to create a corps of fortune-tellers, sooth-sayers and wizards to “predict” that future?
==> (Sorry, Mr. Smith, we “experts” forecast that your employer will close its doors in 2015 — so NO mortgage loan for you!)
And just what will the punishment BE for any creditor that ever makes a loan that turns out badly? Write-off of the principal? Isn’t that what is supposed to happen NOW — without the proposed rule?
The opportunities for fraud and political mischief here verge on the unbelievable! If every business decision creates the risk of a criminal indictment, then business decisions will slow down and the economy will slow down. Hmmm..... Just like now.
If the Federal Reserve is really concerned about preventing “bad mortgage loans”, then why doesn’t the Federal Reserve require banks to “reserve” 100% of every mortgage loan that is supported by a down-payment of less than 20%? That is simple, impartial and easy to understand. Banks and the FDIC would be fully protected by such a reserve requirement.
But there would be no chance to “reward” political “friends” with such a policy, would there?
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