HUD SAFE Mortgage Act

HUD SAFE Mortgage Act

In case you haven’t heard, there’s a new bill out there called the HUD SAFE Mortgage Act. From what I understand, it passed and became law in the summer of 2009, but states were given up to two years to implement the bill. This legislation makes Owner Financing illegal. If you are not a licensed broker, you will not be able to do owner financing.

This bill is huge. They are considering Lease to Own as a possible owner finance and, if determined to be so, this bill could immediately outlaw lease to own. So many buyers are not able to buy a home with traditional financing and this could eliminate options to those wanna be homeowners.

If you have ever purchased or sold a property using seller financing, you need to take a few moments to read the following message. After you have reviewed the information, send your comments to HUD per the instructions to help stop this devastating proposal. Please, get involved and make your voice heard. Please, help us Make a Difference.

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at Please review and comment regarding the impact of this broad interpretation of the law.

This law was passed subject to the Department of Housing and Urban Development’s (HUD) approval of the law as “compliant” with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules. In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

We desperately need for thousands of citizens across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless concerned citizens have clearly communicated that they are opposed to this portion of the rules. This is your chance to be counted on this issue.


Follow these simple steps:

  1. Logon to Under “title” you will see this bill, FR-5271-P-01
  2. Click on the bill to read the  “proposed rules”
  3. You can click on any of the “public submissions” to read what someone else has written
  4. Scroll to the bottom of the page and click on the last blue “comments due” to leave your comment
  5. Complete the form providing required information with blue asterisks and your comments and then submit. (Note: you do not need to fill in the blanks for organization name, government agency type, or government agency)

What do you say?

Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own. Some ideas from others:

  • The SAFE Mortgage Licensing Act was intended to regulate the mortgage industry, not private individuals. If I own my own properties and want to sell them to someone and let them pay me, I should have the right to do this without being a licensed mortgage broker.
  • Many properties have special circumstances where full bank financing is not possible. Vacant residential lots, investment homes, homes in flood areas, etc. may not be eligible for traditional financing. Individuals who own their own properties have always been able to offer other private parties the option to pay them directly. These rules would prohibit that for all properties which are not owner occupied.
  • Bank loans are not available on some types of properties.
  • The tight lending climate has made bank financing “out of reach” for many.
  • Seller financing is an “age old” tradition based on private property rights.
  • These rules would prohibit even partial seller financing – i.e. a “seller second”.
  • According to HUD’s “Residential Finance Survey” in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear.
  • An estimated 6 million Americans own a property other than their own primary residence.
  • An estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties.
  • 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing.
  • Approximately 5% of homes in US are for sale or for lease… seller financing may be key to liquidating this inventory.

The continued success of our industry as we know it is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.

States cannot supersede HUD’s Proposed Rules!

Here’s information we received directly from HUD:

“HUD will determine the minimum standards for SAFE compliance once the comments are reviewed and decisions made. States cannot exempt individuals that HUD determines must be licensed but can require additional categories be licensed.”

That means that states cannot supersede HUD by passing their own legislation. In other words, it is absolutely critical that we stop this at the source by continuing to flood HUD with comments objecting to this blatant violation of our property rights.

We must speak up and let HUD know what a drastic effect this will have on real estate investors and potential home buyers across the country. Seller Financing is playing a vital role in turning this housing market around—we can’t let them take it away!

As of today, over 1843 comments are posted on the HUD site. We’ve got to keep them coming before the March 5th deadline.

If you’ve already posted your comment, please forward this email to others requesting that they do the same.

Please take 10 minutes right NOW and post your objection on the HUD website.

This post has 4 Comments | Would you like to leave a comment?


  1. Hi George:

    Please, check your state laws.

    Here, in North Carolina, you can owner finance the property you live in when you sell and I believe one more. The caveat, however, is that you must be on both the deed and the mortgage. What this means for investors is that, if they have taken over a property subject-to, their name is not on the mortgage and they cannot sell with owner financing.

    I’ve been told that different states have different numbers of properties and probably different stipulations.

    Let me know what you find out.

  2. What’s the latest, Karen?

  3. Thanks, Joe, for your heartfelt response.

    I agree, we need to pay attention to what’s going on in legislation. Most of us trust that things will continue to roll along in our favor. There are a lot of non-individual friendly things happening in 2010 and it is frightening.

    Thanks for doing something to help.

  4. NREIA is in the beginning stages of formulating a class action lawsuit which will be filed,if necessary, to enjoin HUD (the executive branch) from enforcing this Safe Act. The basis of unconstitutionality is that there is no proveable remedial purpose and effect of the Safe Act and that it takes property rights (the value of the property as owner financed) from the owner for regulatory (public) purposes without payment of compensation.

    If the DumboPewblicans are not stopped here soon you will not be able to sell your used car without a license unless for all cash and you will not be able to sell anything on credit without a license.

    Some of your trigger happy (as well as just scared citizens) successfully stopped inroads to take away their guns. Should you do any less to protect the value of your home and other property.

    Where will you be when the government decides that you can’t sell your home because it won’t insure a loan to purchase it?

    Where will you be when the government decides it won’t insure a loan to you so you can buy a home – because you don’t need a home and would be better off as a renter in public housing?

    Where will all of you be when the government finally goes broke enough to eliminate insurance of mortgages and this law is still on the books? (Once you give an agency like HUD power – just like IRS taxes and SEC stock Madoff with the money regulators – they never give up their power. The laws stay on the books.

    Joe Alfred Izen Jr. and

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