Seller Finance Enhancement Act

To exempt small seller financers from certain licensing requirements and debt-to-income requirements for qualified mortgages. 1. Short title This Act may be cited as the Seller Finance Enhancement Act 2. Findings Congress finds the following: (1) Real-estate seller financing is a transaction in which the owner of a real estate property provides financing for the buyer of that property and the buyer makes some form of a down payment to the seller and then makes installment payments to the seller over a defined period of time. (2) Seller financers provide financing in lieu of the buyer choosing to obtain a loan from a bank. (3) The seller finance industry consists of small business owners who own real estate and provide financing on those properties to underserved borrowers who cannot or would prefer not to obtain traditional financing. 3. Exemptions for seller financers (a) Loan originator license or registration requirements Section 1504 of the S.A.F.E. Mortgage Licensing Act of 2008 ( 12 U.S.C. 5103 (c) Exception for seller financers The requirements of this title shall not apply to any person (other than a depository institution) who— (1) originates not more than 24 residential mortgage loans in a 12-month period; and (2) only originates residential mortgage loans that are with respect to property that is owned by such person. . (b) Debt-to-Income ratios under qualified mortgages Section 129C(b)(2)(A) of the Truth in Lending Act ( 15 U.S.C. 1639c(b)(2)(A) In determining whether a residential mortgage loan is a qualified mortgage, guidelines and regulations issued pursuant to clause (vi) shall not apply to a loan originated by a person (other than a depository institution (as defined under section 3 of the Federal Deposit Insurance Act) or a credit union) who originates not more than 24 residential mortgage loans in a 12-month period and only originates residential mortgage loans that are with respect to property that is owned by such person. . 4. Report on seller financing (a) Study The Secretary of Housing and Urban Development and the Secretary of the Treasury shall jointly carry out a study on— (1) the number of homes bought for under $150,000 or 60 percent of the median home value in a given community, whichever is lower, in the United States by utilizing seller financing; (2) the number of homes described under paragraph (1) sold by licensed mortgage brokers; (3) the potential number of homes described under paragraph (1) which could be sold but aren’t, because seller financiers are unwilling, or from a practical standpoint unable, to comply with mortgage broker rules; and (4) the potential benefit to home values and wealth creation if more homes are able to be sold utilizing seller finance. (b) Report Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Secretary of Housing and Urban Development and the Secretary of the Treasury shall jointly issue a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing— (1) all findings and determinations made in carrying out the study required under subsection (a); and (2) data on the number of transactions utilizing seller financing 20 years, 15 years, 10 years, and 5 years prior to the date of the enactment of this Act.

Summary: Seller Finance Enhancement Act This bill amends the S.A.F.E. Mortgage Licensing Act of 2008 to exempt from certain licensing and registration requirements any person (other than a depository institution) who: (1) originates not more than 24 residential mortgage loans in a 12-month period, and (2) only originates residential mortgage loans for property owned by that person. For determining whether a residential mortgage loan meets minimum standards, the Truth in Lending Act is amended to prohibit the application to loans originated by such a person certain Consumer Financial Protection Bureau guidelines and regulations relating to ratios of total monthly debt to monthly income. The Department of Housing and Urban Development and the Department of the Treasury shall study: the number of homes bought for under $150,000 or 60% of the median home value in a given community, whichever is lower, in the United States by utilizing seller financing; the number of such homes sold by licensed mortgage brokers; the potential number of such homes which could be sold but are not, because seller financiers are unwilling, or from a practical standpoint unable, to comply with mortgage broker rules; and the potential benefit to home values and wealth creation if more homes are able to be sold utilizing seller finance.