I 

116TH CONGRESS 

2D SESSION H. R. 5614 

To exempt small seller financers from certain licensing requirements. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 15, 2020 

Mr. GONZALEZ of Texas (for himself, Mr. CUELLAR, Mr. GOODEN, and Mr. 

BARR) introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To exempt small seller financers from certain licensing 

requirements. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Affordable Homeown5 ership Access Act’’ 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Real-estate seller financing is a transaction 

9 in which the owner of a real estate property provides 

10 financing for the buyer of that property and the 


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1 buyer makes some form of a down payment to the 

2 seller and then makes installment payments to the 

3 seller over a defined period of time. 

4 (2) Seller financers provide financing in lieu of 

5 the buyer choosing to obtain a loan from a bank. 

6 (3) The seller finance industry consists of small 

7 business owners who own real estate and provide fi8 nancing on those properties to underserved bor9 rowers who cannot or would prefer not to obtain tra10 ditional financing. 

11 (4) It is recognized that seller financers are 

12 governed by each State’s particular real estate and 

13 consumer protection laws (including ability to repay, 

14 deceptive trade practices, and usury laws), as well as 

15 State and Federal fair housing and equal oppor16 tunity laws. 

17 (5) Neither of those laws described under para18 graph (4), nor the amendments made by this Act, 

19 are applicable to transactions known as contracts for 

20 deed, land installment contracts, lease options, op21 tions to buy, or rent-to-own agreements. 


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1 SEC. 3. EXCEPTION FOR SELLER FINANCERS WITH RE2 SPECT TO LOAN ORIGINATOR LICENSE OR 

3 REGISTRATION REQUIREMENTS. 

4 Section 1504 of the S.A.F.E. Mortgage Licensing Act 

5 of 2008 (12 U.S.C. 5103) is amended by adding at the 

6 end the following: 

7 ‘‘(c) EXCEPTION FOR SELLER FINANCERS.—The re8 quirements of this title shall not apply to the following: 

9 ‘‘(1) REAL PROPERTY SELLER FINANCERS.— 

10 Any person (other than a depository institution) 

11 who, during any 12-month period— 

12 ‘‘(A) originates no residential mortgage 

13 loan or extension of credit secured by real prop14 erty that (together with any improvements 

15 thereto) has a value of more than $200,000 (as 

16 calculated based on the principal amount of the 

17 loan or extension of credit and the amount of 

18 downpayment, if any); 

19 ‘‘(B) originates not more than 20 residen20 tial mortgage loans or extensions of credit, 

21 where— 

22 ‘‘(i) each such residential mortgage 

23 loan or extension of credit is secured by 

24 real property that (together with any im25 provements thereto) has a value of 

26 $200,000 or less (as calculated based on 


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1 the principal amount of the loan or exten2 sion of credit and the amount of downpay3 ment, if any); and 

4 ‘‘(ii) at least one of such residential 

5 mortgage loans or extensions of credit is 

6 secured by real property that (together 

7 with any improvements thereto) has a 

8 value of more than $100,000 (as calculated 

9 based on the principal amount of the loan 

10 or extension of credit and the amount of 

11 downpayment, if any); 

12 ‘‘(C) originates not more than 30 residen13 tial mortgage loans or extensions of credit, 

14 where each such residential mortgage loan or 

15 extension of credit is secured by real property 

16 that (together with any improvements thereto) 

17 has a value of $100,000 or less (as calculated 

18 based on principal amount of the loan or exten19 sion of credit and the amount of downpayment, 

20 if any); and 

21 ‘‘(D) only originates residential mortgage 

22 loans or extensions of credit that are with re23 spect to property that is owned by such person. 


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1 ‘‘(2) MANUFACTURED HOME SELLER

2 FINANCERS.—Any person (other than a depository 

3 institution) who, during any 12-month period— 

4 ‘‘(A) originates not more than 30 loans or 

5 extensions of credit that are primarily for per6 sonal, family, or household use and that are se7 cured by a security interest on a manufactured 

8 home (as defined under section 603 of the Na9 tional Manufactured Housing Construction and 

10 Safety Standards Act of 1974); and 

11 ‘‘(B) only originates residential mortgage 

12 loans or extensions of credit that are with re13 spect to property that is owned by such per14 son.’’. 

15 SEC. 4. EXCEPTION FOR SELLER FINANCERS IN THE DEFI16 NITION OF MORTGAGE ORIGINATOR. 

17 Subparagraph (E) of section 103(dd)(2) of the Truth 

18 in Lending Act (15 U.S.C. 1602(dd)(2)) is amended— 

19 (1) by redesignating subparagraphs (F) and 

20 (G) as subparagraphs (G) and (H), respectively; 

21 (2) by amending subparagraph (E) to read as 

22 follows: 

23 ‘‘(E) does not include, with respect to a 

24 residential mortgage sale, a person or entity 

25 (including a corporation, partnership, propriVerDate Sep 11 2014 17:57 Jan 16, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5614.IH H5614

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1 etorship, association, cooperative, estate, or 

2 trust) if— 

3 ‘‘(i) such a person or entity provides 

4 seller financing, in a 12-month period, for 

5 the sale of— 

6 ‘‘(I) no property where the loan 

7 or extension of credit is secured by 

8 real property that (together with any 

9 improvements thereto) has a value of 

10 more than $200,000 (as calculated 

11 based on principal amount of the loan 

12 or extension of credit and the amount 

13 of downpayment, if any); 

14 ‘‘(II) not more than 20 prop15 erties, where— 

16 ‘‘(aa) each such loan or ex17 tension of credit is secured by 

18 real property that (together with 

19 any improvements thereto) has a 

20 value of $200,000 or less (as cal21 culated based on principal 

22 amount of the loan or extension 

23 of credit and the amount of 

24 downpayment, if any); and 


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1 ‘‘(bb) at least one such loan 

2 or extension of credit is secured 

3 by real property that (together 

4 with any improvements thereto) 

5 has a value of more than 

6 $100,000 (as calculated based on 

7 principal amount of the loan or 

8 extension of credit and the 

9 amount of downpayment, if any); 

10 and 

11 ‘‘(III) not more than 30 prop12 erties, where each such loan or exten13 sion of credit is secured by real prop14 erty that (together with any improve15 ments thereto) has a value of 

16 $100,000 or less (as calculated based 

17 on principal amount of the loan or ex18 tension of credit and the amount of 

19 downpayment, if any); and 

20 ‘‘(ii) each piece of real property de21 scribed under clause (i) is owned by such 

22 a person or entity and serves as security 

23 for the loan or extension of credit, provided 

24 that such loan or extension of credit— 


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1 ‘‘(I) is not made by a person or 

2 entity that has constructed, or acted 

3 as a general contractor for the con4 struction of, a residence on the prop5 erty in the ordinary course of business 

6 of such person, corporation, associa7 tion, estate, or trust; 

8 ‘‘(II) is fully amortizing; 

9 ‘‘(III) is with respect to a sale 

10 for which the seller determines in 

11 good faith and documents that the 

12 buyer has a reasonable ability to pay 

13 the seller; 

14 ‘‘(IV) has a fixed rate or an ad15 justable rate that is adjustable after 5 

16 or more years, subject to reasonable 

17 annual and lifetime limitations on in18 terest rate increases; and 

19 ‘‘(V) meets any other criteria the 

20 Bureau may prescribe;’’; and 

21 (3) by inserting after subparagraph (E) the fol22 lowing: 

23 ‘‘(F) does not include, with respect to a 

24 residential mortgage loan or extension of credit, 

25 a person or entity (including a corporation, 


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1 partnership, proprietorship, association, cooper2 ative, estate, or trust) if— 

3 ‘‘(i) the loan or extension of credit is 

4 seller financed and is a consumer loan or 

5 extension of credit secured by a security 

6 interest on a manufactured home (as de7 fined under section 603 of the National 

8 Manufactured Housing Construction and 

9 Safety Standards Act of 1974); and 

10 ‘‘(ii) each home described under 

11 clause (i) is owned by such a person or en12 tity and serves as security for the loan or 

13 extension of credit, provided that such loan 

14 or extension of credit— 

15 ‘‘(I) is not made by a person or 

16 entity that has manufactured the 

17 manufactured home; 

18 ‘‘(II) is fully amortizing; 

19 ‘‘(III) is with respect to a sale 

20 for which the seller determines in 

21 good faith and documents that the 

22 buyer has a reasonable ability to pay 

23 the seller; 

24 ‘‘(IV) has a fixed rate or an ad25 justable rate that is adjustable after 5 


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1 or more years, subject to reasonable 

2 annual and lifetime limitations on in3 terest rate increases; and 

4 ‘‘(V) meets any other criteria the 

5 Bureau may prescribe;’’. 

6 SEC. 5. REPORT ON SELLER FINANCING. 

7 (a) STUDY.—The Secretary of Housing and Urban 

8 Development and the Secretary of the Treasury shall 

9 jointly carry out a study on— 

10 (1) the number of homes bought for under 

11 $200,000 or 60 percent of the median home value 

12 in a given community, whichever is lower, in the 

13 United States by utilizing seller financing described 

14 under section 2; 

15 (2) the number of homes described under para16 graph (1) financed by licensed mortgage brokers or 

17 depository institutions; 

18 (3) the potential number of homes described 

19 under paragraph (1) which could be financed by li20 censed mortgage brokers or depository institutions 

21 but are not, because seller financiers are unwilling, 

22 or from a practical standpoint unable, to comply 

23 with mortgage broker rules; and 

24 (4) the potential benefit to home values, neigh25 borhood stabilization, and family wealth creation 


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1 through affordable homeownership if more homes 

2 are able to be sold utilizing seller financing. 

3 (b) REPORT.—Not later than the end of the 1-year 

4 period beginning on the date of the enactment of this Act, 

5 the Secretary of Housing and Urban Development and the 

6 Secretary of the Treasury shall jointly issue a report to 

7 the Committee on Financial Services of the House of Rep8 resentatives and the Committee on Banking, Housing, and 

9 Urban Affairs of the Senate containing— 

10 (1) all findings and determinations made in car11 rying out the study required under subsection (a); 

12 and 

13 (2) data on the number of transactions utilizing 

14 seller financing 20 years, 15 years, 10 years, and 5 

15 years prior to the date of the enactment of this Act. 

Æ 


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