I hope someone who attended the GAMHA symposium this last week will share what they learned about the Safe Act and how it will be enforced on MHP owners. I just finished getting my Manufactured Home Dealer License in NC. What the heck I might as well become a mortgage originator / broker also. I feel the regulation noose getting tighter around my neck.
Please Share.
Here is what I was told already via another correspondence
#1 = It is a Federal Law that passed last year 2008
All states must comply (some have not as yet, including Georgia)
Applies only to residential real estate transactions (not commercial)
North Carolina recently passed House Bill 1523 which provides a special exemption for mfg housing retailers. It basically says that if you are a community operator and you are using a lender to provide the financing for a mobile home purchase, the lender can send you an email that allows you to take an application and run a credit report for them. I
If you (the community operator or any other person or entity) are the lender, then you must be licensed as a mortgage lender. This requires 2 licenses. One is to originate a mortgage and the second is for a mortgage brokers license
I went down to the meeting and certainly learned a lot of great things about the MHP industry. I’m now more afraid and more excited about starting a new park!
Anyway, they did talk about the SAFE Act and I assume some of the others will respond to this. The interesting part I gleaned from the discussion (and keep in mind I was not paying as much attention to this as some, because I am just getting into this) was that real property is what is covered by this. Personal property does not count. Someone there disagreed with the presenter on this, but the crux of it will likely come down to interpretation. Logically this argument makes sense. If I sell my lawnmower on a note, do I need to be licensed? If I sell my house and the land it sits on, that’s a different story.
So, something else to think about in this and maybe research some more. I think there’s a good chance that mobile homes themselves will fall under a personal property exemption.
Was just looking at Ohio Revised Code Section 1322.01. The version I am viewing is presumably current and can be found at http://codes.ohio.gov/orc/1322.
In ORC 1322.01(F), a mortgage is defined “any indebtedness secured by a deed of trust, security deed, or other lien on real property.” In my mind, a lien on a mobile home title is not a deed of trust, security deed or other lien on real property.
If my brief little perusal and the resulting musings are correct, then a Lonnie Dealer would not be a Loan Originator under 1322.01(E) b/c that definition always involves residential mortgage loans…no mortgage loan, no originator. Likewise, a “mortgage broker” is defined with regard to mortgage in 1322.01(G) - so no mortgage, no mortgage broker.
That’s from a perusal. A detailed reading could get me to a different interpretation. Before I reinvent the wheel, does anybody have a different read that explicitly negates my quick argument?
I agree with you on the real definition of “mortgage”. Unfortunately, the people at HUD have used their second grade logic once again by stating that a mortgage is a loan on a personal dwelling. Since many members of Congress still haven’t reached second grade logic they needed HUD to come out with a verbal explanation concerning the SAFE Act.
“”""The SAFE Act’s definition of “residential mortgage loan” includes a loan secured by a consensual security interest on a “dwelling” and cross-references the definition of dwelling in section 103(v) of the Truth in Lending Act (TILA) (15 U.S.C. 1601 note).
Regulation Z, which implements TILA, defines dwelling to mean “a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.” (12 CFR 226.2(a)(19).) Since both the SAFE Act and TILA address consumer protections for borrowers in housing finance transactions, HUD finds that the same interpretation applies under the SAFE Act. In addition, HUD interprets “mobile home” to include a manufactured home, as defined in the National Manufactured Housing Construction and Safety Standards Act of 1974. (42 U.S.C. 5402(6).)“”“”
It looks like each state is going to have to determine whether manufactured home retailers are going to be exempt from this or not. I’m involved with the Georgia Manufactured Housing Association and we are preparing for battle in the legislature coming up next month.
By the way, it appears that most states are relying on the banking commission to provide guidance and monitoring. We are hoping to have a personal meeting with the Banking Commissioner in a few weeks.
I was told by the NCMHA that MHP owners should be exempt from the Safe Act issues when we rent to own or lease option. The problem is I have not seen anything in writing. I have contacted the Mortgage Bankers of America Association in hope of clarity. Nothing yet. I ask my NC bank BBT and they had no idea about how it would effect MHP owners. They also didnt know who was going to enforce the Safe Act. Onward through the fog we say.
Translating the Orwellian acronym, the ACT is neither safe nor fair in reality. The vast majority of all mortgage loans are already based on the sponsorship and guarantees of one or another government agency (the tax payer). I suspect that this is just one of a series of new regulations, laws, and taxes that we will be inundated with. The Act is not the product of Congress representing the will of the citizens, but it is most likely the pay-back to some lobbying group who may even have written the legislation that may not be understood or even read before the vote of our representatives.
Be this as it may, it’s just another intervention by the ruling “elite” in the economy and may be hailed as a job creation program, perhaps even as a new agency with many more government employees and their paraphenalia of requirements or entitlements. So, what else is new? Some day, the piper will come to collect, and that is written in stone.
To say that it doesn’t affect us would not be true. But to say that the new control renders us impotent is also untrue. I can see only a bright future for the MH business as the middle class is slowly eliminated and as most people’s standard of living will be forcibly reduced. The affordable housing market will be one of the beneficiaries, and that is . . . our business.
I am very interested in the SAFE Act in NC and how it will affect lease options on land/home packages and owner financing in general. From what I understand, in NC an investor is allowed 5 deals per year that involve owner financing or lease options, but beyond that getting licensed would be required. However, a few sources say it seems very probable that the 5 deal rule will be eliminated by HUD and no deals may be allowed without a license.
Does anyone have any updated info on the NC legislation?
Go to the Mobile Home Park Store. Look on their Forum. I attached a publication on the Safe Act in NC. At the bottom of the attachment is the phone number for the NCMHA you can call them if you have further questions. I wanted to attach it on this site but dont know how.