The Dodd-Frank Act established some new rules and regulations concerning seller financing. These rules go into effect January 10, 2014.

These rules only apply to a property that the buyer is going to live in. There are NO new rules that include vacant land, commercial property, multi-family and single family residences where the buyer will NOT live in the property. So, the new rules will have NO effect on the vast majority of property owners that will offer seller financing, most of whom will do one transaction in their lifetime.

These rules came about because of the abuse that occurred in the "mortgage origination" field, and unfortunately, seller financing got caught up in this even though a seller does not "originate a mortgage loan" - he is party to an installment sale, that's it.

The law says that if you use seller financing to finance the purchase of a property where the buyer is going to live in the property, you are now considered a loan originator. A Mortgage Loan Originator(MLO) has licensing and legal requirements to abide by.The GOOD NEWS is that there are two EXCLUSIONS to this rule. If you follow these rules, you WILL NOT be a loan originator. Our industry experts estimate that at least 90% of you will fall into the exclusion area. Just follow the rules.

Ric Thom from New Mexico has become the go to guy for legislative issues that affect seller financing. Rather than me paraphrasing Ric's comments, please go to www.securityescrownews.com and read his full discussion - New Rules for Seller Financing.

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"Resentment is like drinking poison and then hoping it will kill your enemies."  Nelson Mandella

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                   NEW MARKETING IDEA

In some parts of the country, real estate brokers are using a new marketing tool to sell their listings - DRONES!

We all know about drones being used in military situations, but to sell a home? Invasion of privacy?

See a short video at: www.abclocal.go.com/kabc/story?id=9211755,

Realtors Using Drones to Showcase properties.

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"Statistics show that at the age of seventy, there are five women to every man. Isn't that an ironic time for a man to get those odds?" ... Unknown.

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According to the Los Angeles Real Estate Investors Club, the mortgage loan application rejection rate for calendar year 2012 for our country's biggest lenders was:

Wells Fargo          29%

JP Morgan Chase  33%

Bank of America   28%

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                    UNDERWATER LOANS

Property data firm CoreLogic has reported that the number of U.S. homeowners who owe more on their homes than they are worth declined from 10.6 million to 6.4 million. This covers the period from 3rd quarter 2012 to 3rd quarter 2013.

The Federal Reserve reports that for the same time period, homeowners net equity soared $2.2 trillion. This is a record rebound for a 12 month period.

My own activity confirms these results. I am seeing more and more sellers with quality notes, carefully constructed, good to decent downpayments, asking for credit histories, etc. 2013 was a good year for most notebuyers and we expect a better year in 2014.

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"Too often we enjoy the comfort of opinion without the discomfort of thought."... John F. Kennedy

"Do three things every day - laugh, think, cry." ...Jim Valvano, college basketball coach, ESPY Awards show March 1993. Died of bone cancer April 1993.

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     ADJUSTABLE LOANS ARE POPULAR - AGAIN!

Is this a good or bad thing?

According to San Diego research firm DataQuick, 11.2% of homes purchased in Southern California with a mortgage in November 2013 were bought with an ARM - adjustable rate mortgage. This is a result of increasing home prices and interest rates.

DataQuick reports that ARM'S have been most popular in the higher priced communities, contrasting with the flood of lenders into working class communities prior to the housing bubble.

According to HSH.com, a financial publisher, teaser rates are gone, and the current ARM products are " venerable, long-dated products." With new federal regulations taking effect this month, some of the riskier ARM'S such as interest only products and those with balloon payments will be eliminated.

Seems to me the underlying premise is that borrowers in "higher priced communities" will be better educated and more knowledgeable about any potential risk they are taking. Maybe.

Deja Vu all over again??

If you enjoyed this Newsletter, tell a friend.

If you know how I can make it better, tell me.

Thanks for reading.

 Denny Stanz

CA Broker # 01915404