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 ...
Unless you were in the loan business commercially requiring a license, no approval process would take place.
This is part of a continuing move to funnel financial transactions through a few institutions that can be more easily scrutinized by the federal government. Big brother can more readily keep his eye on a few banks instead of a large number of individuals that want to work things out for themselves. The ultimate goal, it appears (not from this article, but from the Dodd-Frank Bill and others), is to have a handful of large banks in the nation that can be controlled by the federal government.
We sold the same house 3 times this way. IF they defaulted we just resold it. Made money every time. Eventually put it on the market and got rid of it for good.
Subpart A—GENERAL
§ 226.2 Definitions and rules of construction
http://www.fdic.gov/regulations/laws/rules/6500-1400.html#fdic6500226.2
(17) Creditor means:
(i) A person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.
- - - - -
If this is not your business, it doesn't apply to you.
Thanks. The effect of rule by regulatory pronouncements is bad enough without exaggerating particular examples.
Will it do away with land contracts?
It would be no different that claiming commercial trucking rules apply to me as I haul my tractor on a trailer to the field.
Great point. Which is why the feds want to force it to be financed by inter-state institutions.
The law states it only applies to creditors making loans more than 5 times in a single calendar year.
This is not a law about individual sales, but those in the business of making loans.
http://www.fdic.gov/regulations/laws/rules/6500-1400.html#fdic6500226.2
PART 226—TRUTH IN LENDING (REGULATION Z)
Subpart A—GENERAL
§ 226.2 Definitions and rules of construction.
(17)(v)
” It would be no different that claiming commercial trucking rules apply to me as I haul my tractor on a trailer to the field. “
Maybe under ‘original interpretation’ but —
http://en.wikipedia.org/wiki/Wickard_v._Filburn
Wickard v. Filburn
Wickard v. Filburn, 317 U.S. 111 (1942), was a U.S. Supreme Court decision that recognized the power of the federal government to regulate economic activity. A farmer, Roscoe Filburn, was growing wheat for on-farm consumption. The U.S. government established limits on wheat production based on acreage owned by a farmer, in order to drive up wheat prices during the Great Depression, and Filburn was growing more than the limits permitted. Filburn was ordered to destroy his crops and pay a fine, even though he was producing the excess wheat for his own use and had no intention of selling it.
The Supreme Court, interpreting the United States Constitution’s Commerce Clause under Article 1 Section 8 (which permits the United States Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”) decided that, because Filburn’s wheat growing activities reduced the amount of wheat he would buy for chicken feed on the open market, and because wheat was traded nationally, Filburn’s production of more wheat than he was allotted was affecting interstate commerce, and so could be regulated by the federal government.
Little late: This proposed rule came out on April 19.
“The Board is soliciting comment on the proposed rule until July 22, 2011. General rulemaking authority for TILA is scheduled to transfer to the Consumer Financial Protection Bureau on July 21, 2011. Accordingly, this rulemaking will not be finalized by the Board.”
I am outraged that something of this sort would even be a topic of discussion - if I wish to lend someone some money, that’s my business. Frankly, if I lend them money to buy my house, I have security, I get a monthly check, the buyer has a house to live in, I probably spent some money to fix up the house before the sale and the buyer’s wife definitely will spend some money to upgrade the kitchen and a bathroom or two. What’s the downside to anyone, so long as state usury laws and laws concerning the transfer of real estate are followed? WTF business of the Fed or the federal government is it if I choose to lend my own money!
Rope. Tree. Banksters and politicians. Some assembly required.
“I am not sure how this could be enforced.”
Easy. Recorded Notes and Deeds of Trust. Computers. Tax Returns.
That was still a regulation directly applicable to the man’s profession. He was trying to claim an exception due to his use, not his work or method of earning.
Look at my posts above. Unless you owner finance property more than 5 times a calendar year, you are specifically excluded.
“Banksters “
I doubt if banks are very worried about competition from a few owners carrying seller financing
The law states it is not applicable to individuals unless you perform more than five real estate loans in a calendar year.
I have owner financed property before. You do not go through an approval process as the note is only between the two individuals.
” Unless you owner finance property more than 5 times a calendar year, you are specifically excluded. “
Not arguing with you there.. (although over-reach by regulatory agencies over time is hardly an unknown phenomenon...)
I was merely demonstrating that your contention that non-interstate transactions and activites are not subject to Federal interference/regulation - ain’t necessarily so....
This is my business. I am a small time real estate investor and sometimes the way I try to take a profit is to create a mortgage, usually one that “wraps around” my own obligation to someone else. I am a sub prime borrower and a sub prime lender. No way a can I or most of the folks I deal with qualify a conventional loan. Guess I’ll have to learn how to steal or get food stamps and section 8 housing.
“...A person who regularly extends consumer credit that is subject to a finance charge....”
OK, so what is the definition of “regularly extends consumer credit?” What if I buy homes, fix them up and then sell them with owner financing? Am I regularly extending consumer credit if I do this 2x/year? 4x? 12x? I’m not a bank, I’m in the business of fixing up houses and selling them, and if selling is made easier by providing financing to the buyers, what business is that of the government?
Owner-financing is very different from an ordinary mortgage in the sense that the person financing is not actually giving anyone any money. His security is property that is already in his possession and in most cases he is able to define default in much stricter terms than a bank can.
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