Dodd Frank and The Safe Act

We heard a seminar about the above acts and how the could create many issues for MHP owners selling and financing homes. Has anyone else heard or been affected by this? There are some pretty nasty enforcement possibilities for violations.

The SAFE Act was passed in 2008 and Dodd-Frank in 2010, so they’ve been around for a while., The bottom line is that you can no longer create mortgages on mobile homes unless you become SAFE Act licensed and compliant. Many owners have ended such practices and gone back to straight rentals. Others have obtained their license. It’s a matter of personal choice. Once you pick your path, there’s not much complication to it. If you still make mortgages without getting SAFE Act compliant, you indeed face penalties.

Where does a lease to own agreement fall in relation to the SAFE Act and Dodd-Frank?

Many states (although it is yet to be actually a point of case law) claim that a “rent-to-own” or “lease/purchase” is a “disguised mortgage” and not allowed under the SAFE Act. The only safe plan of action if you are not going to be SAFE Act compliant is to simply rent the mobile homes, or sell them for cash.You need to talk to your state mobile home association (MHA).

Also, be aware that in most states, rent to own will not get you off the hook as far as repairs go. Landlord tenant law still applies. I am not a lawyer but I have heard lawyers make that comment.

Don’t you have to finance 5 or more homes a year to fall under the act?

I believe the limit is 2 or more mortgages/year.  Anyone can create 1 mortgage a year without having to become a Mortgage Originator.  That said, Rent Credit (like airline frequent flyer programs) appear to be exempt from Dodd-Frank.  So just go with that and RC as many homes every year as you can.  Several of the large REITs do it this way, as do Frank and Dave.My 2 cents worth, and I’m definitely not an attorney,-jl-