SAFE ACT – HUD Final Rule

July 4, 2011  |  2 Comments  |  Land Contract News

On June 30, 2011, The Department of Housing and Urban Development (HUD) issued the SAFE ACT FINAL RULE which addresses mortgage loan originator licensing requirements in the case of seller financed transactions such as Land Contracts.

The Rule states in part:

As an initial statement, HUD confirms the commenters’ observation that a ‘‘residential mortgage loan’’ includes an installment sales contract, which the commenters advise is frequently involved in seller financing. ‘‘Residential mortgage loans,’’ as defined by section 1503(8) of the SAFE Act, refers to typical financing mechanisms such as mortgages and deeds of trusts. In addition, the SAFE Act definition also includes ‘‘other equivalent consensual security interest on a dwelling (as the term ‘dwelling’ is defined by section 103(v) of TILA) or residential real estate upon which is constructed or intended to be constructed a dwelling,’’ which has the potential for including a broad range of other financing mechanisms. For the purposes of this rule, ‘‘equivalent consensual security interests’’ specifically include installment sales contracts, consistent with the treatment by many states of such contracts in the same manner as mortgages and purchase money mortgages offered by sellers of residential real estate. While there is no formal recorded lien held by the provider of financing, the fact that the seller holds title to the property until the contract has been paid in full is the practical equivalent of a lien for purposes of the SAFE Act and its purposes and is comparable to the status of a mortgage in a state that follows title theory under mortgage law.


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About Allan Daniels

A 3rd generation real estate investor, lender, and land contract buyer, Allan has served in many key leadership positions within real estate and mortgage trade associations on the local, state, and national level. In Michigan, Allan served as President of the Michigan Mortgage Brokers Association (MMBA) in 2000. For his achievements, Allan earned the MMBA 2000 Distinguished Leadership Award, and was named MMBA Broker of the Year for 2001, 2002, and 2003. Allan was the first recipient of the MMBA Lifetime Achievement Award in 2004. In addition to his work within Michigan, Allan previously served in the National Association of Mortgage Brokers (NAMB) as a member of the Board of Directors; Delegate Council; Government Affairs; Bylaws; and Best Lending Practices Committees. Allan also served as an officer on the NAMB Executive Committee as Treasurer, and also as Regional Vice Chair of the NAMB Legislative Committee for the Midwest Region. Currently, Allan serves as Chairman of the State of Michigan Mortgage Industry Advisory Board, that makes recommendations to the Commissioner of the Office of Financial and Insurance Regulation (OFIR), the state agency that regulates mortgages and land contracts. In 2011 and 2012, Allan served on the Insurance and Finance Advisory Rules Committee to produce proposals to the state Office of Regulatory Reinvention (ORR), and he began a two-year term on the Board of Directors of the Michigan Association of Realtors in 2013. Dr. Daniels and Son is one of the largest purchasers of Land Contracts in Michigan. The Daniels family has been purchasing Land Contracts and private (seller-held) notes and mortgages for three generations. Allan Daniels has been licensed in Michigan Real Estate since 1988 and specializes in buying land contracts and real estate. Dr. Daniels and Son also offers private-money business-purpose real estate loans.

2 Responses to SAFE ACT – HUD Final Rule

  1. Louis Smith

    I own a house with a Contract for Deed to a buyer that requires monthly payments for 5 years with a balloon payment at the end. A neighbor has told me that the buyer is tearing up the floor in the house. What rights do I have per Tennessee law to request the buyer allow me or a representative to inspect the home? Is there information for a homeowner regarding “owner rights” from the state of Tennesee? I have chekced the internet and there are multitudes of information on “buyers rights” but nothing on “Owners Rights”.

    • Allan Daniels

      Hi Louis: Thank you for the comment. As you have discovered, many states have laws defining Buyer’s rights and Seller’s rights. There will also be court cases that provide judicial precedent. In my state, there are a number of good lawyer’s who specialize in real estate law. If you cannot locate one in Tennessee, you may wish to contact the Tennessee Bar Association to help you. I found this website. I hope it helps.



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