In August I posted information on how the recent passage of the Secure and Fair Enforcement for Mortgage Lending Act (SAFE Act) can make it difficult for sellers to offer seller financing, including land contracts, to buyers of residential properties, including vacant lots upon which a 1-4 family residence is intended to be built. According to the generally accepted interpretation of the rules, it appeared that that a viable financing option for many situations, seller financing, was no longer going to be available.
Well, the Wisconsin REALTORS Association has been on the case, and after prodding the Wisconsin Department of Financial Institutions for answers to a series of questions, the DFI decided to modify its position with respect to seller financing when the property in question is the seller's residence. If the transaction involves the sale of the seller's residence, then the transaction is exempt from the new rules, and neither the seller nor the brokers involved have to have mortgage licenses.
To put it more specifically:
- If the property is the seller’s residence, then it is an exempt transaction and neither the parties nor the brokers need a mortgage loan originator or other mortgage license.
- If the property is not the seller’s residence and the buyer is not purchasing the property for the buyer’s residence, then neither the parties nor the brokers need a mortgage loan originator or other mortgage license.
- If the property is not the seller’s residence and the buyer is purchasing the property to be used as the buyer’s residence, then the seller and the broker need to have a mortgage loan originator or some other mortgage license.
It appears that this may not be the final word in the matter. HUD has not issued its final SAFE Act rules, so there may be a Part III post to follow.