The answer is "probably."

Does the government know it is doing this? Probably not.

I am far from an expert on this murky, governmental intrusion with its complex and contradictory rules, but let me try to simplify recent history.

Because the banks and other institutions screwed people and created a huge mess, the government feels obligated to save us all. True to form, they will probably drown a whole bunch of us in the process.

The S.A.F.E. Act was passed last year, and essentially said that if you originated a loan, you had to get a special license. And, the government would set up a nice, new bureaucracy that would test you, charge you fees, and establish a whole bunch of rules to make it harder for you to cheat your fellow American. This was the government's way of preventing "predatory lending."

Thrown into the mix was seller financing. As an average citizen, a consumer, if you wanted to sell a property that was not your primary residence, the government said "Wait just a minute - you can't do that." No, you had to get a special license, and fall under their Big Brother bureaucracy that would monitor you. After all, you might be a predator. You might be out there trying to screw people. So, the government must protect people from YOU. Get the picture?

Well, last month, after 5000 plus comments from people like you and me, our government eliminated this provision. Shock waves echoed through Washington, as they said to themselves " Oh my God, what have we done to these poor people." Compassion swept through the city !!

That's the good news. They listened. However, while saying that we can sell as many properties as we want - and they will let the states decide how many that should be - our wise politicos substituted language that said " As long as you don't sell these properties habitually."

What does "habitually" mean? No-one knows.

Then there is the Dodd-Frank Act. While the S.A.F.E. Act set up rules to become a Mortgage Originator and essentially was designed to outlaw seller financing, Dodd-Frank contradicted it by allowing up to 3 seller carryback transactions per year without a license. But, the note had to fully amortized over 30 years. No balloon allowed. But, the local community bank could offer a balloon in 5 years. After all, their risk would certainly be greater than anyone offering seller financing. Wouldn't it?   The Act protects these small banks in their transactions, but not you and me in ours. After all, we are just consumers. Right?

And here is the reason I am writing this article today.

In the last few weeks, new language has been inserted. Specifically, an amendment - Section 129.  This is the Ability to Repay amendment. If you want to sell your property by offering a seller carryback, you must determine the ability of your buyer to pay by requesting whatever documents you need to make that determination. Does this mean you have to qualify your buyer under the same standards that banks use? You know, the same banks that have been refusing loans to millions of people? Is that the standard we should follow with our potential buyers? Buyers we can't give a balloon to? Buyers we must amortize over 30 years? If we are 60 or 70 years old and have to wait 30 years for our money - money we will never see because we will die before it is all due?

We don't know the answers.

Follow me? This is our government at work.

I may have a fact or two messed up, but I know the bottom line. Our government is taking away free choice - for you and I to buy and sell a property on OUR terms - not the government's.

The National Association of Realtors has been working hard to save seller carryback. They are sending a strong comment to the Federal Reserve asking them to abolish the "Ability to Repay" amendment from Seller Carryback. The Fed is accepting comments until this Friday, July 22, then passing them on to the Consumer Financial Protection Bureau, who will adopt the rules that we will have to follow.

Please, if you care about our ability as buyers and sellers, to negotiate our own seller carryback transactions, you need to submit a comment. I have already done so. Go to www.papersourceonline.com. Click on "Red Alert". Read the instructions, read the talking points and what other people have said. Then, at the bottom of the page, write and submit your comment. It worked when 5000 people did it last month. It can work again.

Sincerely,

Denny Stanz

760-245-5366
760-245-5367 fax
dennystanz@verizon.net
www.CaliforniaNoteBuyerLLC.com