My business partners and I are looking at purchasing a park in Iowa that has 6 POH, 3 of them are vacant and 3 of them carry a mortgage balance. The owner wants to sell the homes/mortgages with the park. Here is my question, if/when we purchase the 3 mortgages do we need to be SAFE act licensed?
Thanks for any help!
Adam
Mortgage isn’t quite the right word because the homes aren’t real property but chattel (personalty). So the answer lies in how your state construes the contracts – is it an RTO or a contract-for-deed or a true sale & mortgage (per Dodd-Frank definition) and then will you be a “servicer?” Most of the new regulations regard “originating” loans which you’re not “originating” if you are just “servicing” them. On the other hand, you still have to follow the rules.
If the homes have a mortgage balance, then they are not POH but owned by the resident. You are purchasing 3 notes (or contracts) and 3 empty POH with the park.
If the contracts aren’t written “right,” you could be purchasing a big liability. So have them looked at by your attorney.
The rules are federal but implemented by the states. So you’ll have to ask someone in Iowa. This area of law is very new and completely unclear in many ways. So you’ll probably have to get comfortable with some risk. What’s your liability? Probably capped at most (for realistic situations) at the amount of the note. So don’t put too much value on those notes. They may pay off or they may not, and if they don’t then you have the homes instead, which could be worth whatever they’re worth.