Dodd Frank Exemption


Last weekend I was driving around and playing with the radio and came across a real estate show. As I understood it the, guy was saying you can do three owner financing deals yourself per year and after that you have to use a licensed mortgage broker or become one yourself.

Do you know anything about that?



That is more/less correct.

However, there are workarounds.

Let’s get to the matter at hand.
What are you trying to accomplish?



I am selling off my POHs and buying homes moving them in and selling them.

I now understand that the SAFE Act is something the States handle and you have to understand what the laws are the states you do business in.

Here is a video I found yesterday that really changes my understanding of the whole damn Dodd Frank, Safe Act issue. I am going to dig deeper and call the banking regulators in my States and and talk it over with them but I would love to hear what you have to say Mike.


Why is everyone always trying to get around the SAFE Act? After you qualify them as tenants (pulling their credit, verifying their income) it’s not hard to get a mortgage broker to give them a letter saying they met the requirements of the SAFE Act. $50-$75 usually does it if you shop around your local REIA.

My standards are likely stronger than Dodd-Frank, anyway:

  1. I don’t let tenants pay more than 40% of their income in housing costs, including utilities.
  2. I require rent to be auto-withdrawn from either each worker’s paycheck or their bank account. And they do have to have a bank account!
  3. If they don’t have a 700 credit score, I require them to create a budget that subtracts from DOCUMENTED income home rent, space rent, utilities, cell phone, child support and alimony, health insurance, student loan payments, child care, car payments, credit card min. payments, cable TV, Internet, car and renter’s insurance payments, and every other “regular” monthly payment. I reserve the right to examine bank statements or receipts to verify these items. Then from the total, I use the Low Cost Plan in the USDA food cost estimate for each person:
    If there isn’t at least $200/mo. left over, to cover car repairs, medical co-pays, and other unforeseen expenses, I won’t rent to them.

Note that you will have a few tenants who will refuse to let you look at something…bank statements, for example. Or they won’t make the budget. These are the EXACT same tenants who will stop paying rent later.


Are you saying that if you get a broker to provide you with a letter that states they meet the requirements, you can avoid the exemption limits?


Deb - yes, if you use a broker (MLO) there is no problem with Dodd Frank and the Safe Act. That will cost you and it can not be done everywhere; I call every Mortgage Loan Originator in NE an SD and everyone said they were unable to do it. They said they only work for putting together bank loans.