We Won - sort of, is the message heard everywhere from real estate investors.
The legislative battle over seller financing has had a lot of real estate investors worried. For those investors who regularly provide seller financing for the sale of their properties, passing this law could potentially have a huge effect on the way they do business.
Savvy real estate investors have worked with "less than credit worthy buyers" to get them into a house for a long time. Helping them clean up their credit and get them ready for a traditional mortgage was a service they were able to provide. It was a win-win for both parties. The investors were typically able to charge a higher interest rate because of the risk they were taking. As the buyers made on time payments on the house, they were building a stable credit history that would allow them to qualify for a mortgage usually 12 to 24 months.
The original House bill proposed to limit seller financing only to licensed mortgage originators OR be limited to one transaction every three years. This would essentially cripple real estate investors that wanted to do seller financed transactions.
NAR (The National Association of Realtors) lobbied to kill the provision that would greatly curb seller financing. For the most part, it paid off. While the new proposed regulations are not what real estate investors had hoped for, they are certainly better than what was originally proposed.
According to the Wall Street Journal...
The House-passed version of the bill would have required people to register as mortgage originators if, more than once over a three year period, they finance a sale of a property they own. The provision was written into the bill out of concern that unscrupulous businesses would try to get around the new tough lending rules by financing real estate transactions themselves.
But this week, Senator Christopher Dodd (D. Conn.) and Rep. Barney Frank (D.Mass), who are the lead House and Senate negotiators working to finish the financial-overhaul legislation, agreed to relax the limitation on seller financing to three properties in one year.
While "seller carry back financing" only affects a small percentage of home buyers, it was important enough to NAR that they lobbied for the changes. Now lets just hope the Senate doesn't screw it up.
My name is Sharon Vornholt and I own a company called Innovative Property Solutions, LLC. I have been investing in real estate for more than 10 years and I am passionate about real estate. It is now my full time occupation.
I buy distressed homes from folks that need to sell quickly. These houses will be renovated and either will become rentals or will be resold. Many of these homes will provide affordable housing for first time homebuyers.
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