Owner Financing Killed by Dodd - Frank

Just when you thought your federal government could not get any more intrusive or stupid when it comes to over-regulating and killing the real estate market we get the latest interpretations of the Dodd Frank Act. This 2000 + page monstrosity requires an owner financing sellers to do the following:

Barney Frank

1. Verify Borrower's ability to pay. In an amendment to the Truth in Lending Act Chapter 2, the Owner Finance Seller/Lender is now required by minimum standards now in place to verify and document the consumers ability to repay the loan including taxes, insurance and other assessments. And if there are multiple loans, i.e. 1st and 2nd creditor must verify and document the consumers ability to repay both loans. In doing this determination the owner/financer must include consideration of:

A) Consumer's Credit History
B) Current Income
C) Expected Income
D) Current Obligations
E) Debt-to-Income Ratio or Residual Income after non-mortgage related debt and mortgage related debt.
F) Employment Status
G) and other financial resources other than the consumers equity in the dwelling

In other words, an owner financer must become a........bank. If they do not comply they can be forced to return all payments to the borrower regardless of how much benefit the borrower received through the use of the property.

Owner Financing Killed by Dodd - Frank