Do the SAFE regulations effect the ‘rent-to-own’ sale of RVs and travel trailers in a park?
The safe act would not be violated unless you created a security interest against the home. Though… you might be in violation of an IRS rule on disguised financing. If the term goes for more than a year, you probably will have some funky requirements concerning implied interest. We use a true lease option. The term of the lease does not effect the purchase price of the home. At the end of the lease, a new contract is drawn up for the home purchase. The purchase amount can not be unreasonable low, or the this is also a considered a loan. Your really dancing between two sets of rules, one with the safe Act, and the other the handbook of the IRS…
Thanks for the reply Jim.So those in government that claim they want to promote financing for affordable housing are actually trying to make that as difficult as possible to accomplish for many of the poor. Typical bureaucratic hypocrisy? Or just government protection for the legal racketeers in the mortgage industry? When we do a rent-to-own deal on a small RV it is to those who have little income or other assistance and no bank account. Even doing a lease option and putting a portion of that into a joint escrow account for them to do the purchase with when there are enough funds - that would be considered a work around and probably get you into trouble.At this rate we should be considering the opening of community campgrounds as that will be all some people will be able to afford to live in - tents.
Like many things, government or in our personal lives, our reactions tend to over correct. So we really fail safe the problem, then begin passing (conceding) laws (points) to bring the correction back in line. The problem with the system was not really the banks, but the programs they could use for lending. So things swing harder for a while, but they will loosen with new programs, loopholes etc in due time. I think for us, the lease / option program will work just fine.
The SAFE Act was supposed to apply only to mortgage companies, but it was poorly written and ended up including just about everyone. It was enacted in 2008 as a result of the mortgage meltdown, and was a strictly PR stunt by the administration to pretend to be helping the poor American consumer. It has accomplished nothing but reducing the availability of mortgages for the consumer.