Are Lonnie deals still legal?

mobile home university
1

I was just wondering if Lonnie deals were still legal? I was under the impression that Obama ended up regulating it so you couldn’t do it.

Thanks, Kevin

2

I believe the book was revised in 2013 to comply with regulations passed during the Obama administration, but I have not read the updated version myself.

3

My understanding is that Obama made regulations that got rid of “buy here, pay here” car lots. We became collateral damage in not being allowed to seller finance trailers to buyers. Is that accurate?

4

The space is more regulated, but I don’t think anyone ever said “it’s not allowed.” The mobile home industry (to my knowledge) has not tested these laws in the court system so there is still a lot of debate the extent to which the laws apply - especially to smaller operators.

The CFPB isn’t even going after payday lenders anymore, so I do question the enforcement capability behind these regulations.

5

Well I believe that if you break it down pretty much all of us are Lonnie Dealers.

6

My understanding is you can’t do owner financing on mobile homes, correct?

7

The SAFE Act (circa 2008) and Dodd-Frank (circa 2010) require that anyone who engages in creating a mortgage be SAFE Act licensed and compliant. As a result, unless you become SAFE Act compliant, you are no longer allowed to sell and carry paper on a transaction with a home customer, but instead can only rent the home or sell it for cash. This does NOT apply to carrying paper on mobile home parks, just homes.

There was legal argument at the time that the SAFE Act was passed that installment sales are not “mortgages”, but nobody ever wanted to spend the legal cost to fight it, and there is no case law to my knowledge that supports the government’s theory that they are.

At this point, most of the industry is waiting for the SAFE Act to be amended to transactions over $50,000 (because that was the rumor) but it has never failed to materialize. Keep in mind that these laws also impact stick-built home sales and have caused huge damage to the ability for less affluent Americans to attain overall home ownership, as most moms and pops refuse to get SAFE Act licensed.

At a time in which affordable housing is a huge problem in the U.S., it’s crazy that the government would want to hamper the availability of citizens to be homeowners and instead force them into being renters. But that’s literally how it has turned out. I think that history will prove out that the SAFE Act was one of the worst ideas of that era.

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