Hopefully this becomes moot with new legislation, but states like MN effectively legitimize installment sales with articles like this, right? So are we really dealing with a state vs federal issue at the end of the day?
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And now that the CFPB is acting with “humility and moderation” as part of its strategy - to what extent do you believe that it will be actively seeking out MHP owners who could potentially be utilizing installment sales?
The rule of thumb when it comes to regulatory issues is that whatever government body or regulator has the most stringent laws, rules, regulations, or letters of advisement prevails.
So, if the federal government has more stringent requirements, their position will trump state law. However, if state law is more restrictive, the state laws on that particular issue will prevail.
Sometimes, local law will prevail for the same reasons.
It is also worthy of note that sometimes state laws will have provisions that do not prevail state-wide, but only in. certain parts of the state. The federal government also does this in regard to lending with issues like HMDA and other lending issues in rural areas.
All of which makes it very complicated for a multi state operator when it comes to staying out of trouble.
It is also important to remember when considering any form of lending, that there are other laws the seller financier is expected to comply with even if the method of conveyance is not one that requires an MLO or a state lending license. Some federal laws have very strict rules and regulations with potentially (relatively speaking) huge fines and in a few cases like OFAC and AML, potential prison sentences for non compliance.
I am very hopeful that the CFPB’s recent changes will help our industry tremendously, but remember that pre-Trump they took a lot of steps and created lots of rules and regulations that while they are now just “sitting on” still exist. When we get a new POTUS, if that person is someone like Liz Warren or Kirsten Gillibrand we could be back to where we were before Trump in as short a time frame as six months.