This evening Alison and I attended a meeting with Doug Foster, the head of the agency that enforces the SAFE Act in Texas. Veteran real estate and note investor (and long-time PAPER SOURCE JOURNAL subscriber) Tom Henderson also spoke at the meeting, spiritedly representing sellers who carry back notes.
Most of what Mr. Foster said applies to all the states except those 13 that have exempted seller carrybacks (Texas is not one of them). He said that if a state exempts seller carrybacks HUD can step in and take over the administration of the SAFE Act in that state. That didn’t stop the 13 states that did it! (I’ve heard something about 13 colonies…)
However, he pointed out that HUD received over 10,000 public comments on the SAFE Act, and three-quarters of them were about seller financing — presumably, all those 7500+ comments said “don’t include seller financing!” — and he said because of that HUD is “softening” on the issue, which apparently means they may not bring the hammer down on those 13 states or on others that exempt seller carrybacks. Mr. Foster also sent a letter to the Texas Assn. of Realtors in support of the deminimis exemption that previously existed in Texas law, allowing five seller carrybacks in any 12 month period without a license.
I’ll have a full report on what he said, more of my suggestions as to how to determine if you will need a residential mortgage originator’s license, and suggestions about how to comply with the SAFE Act without jumping through the hoops of getting one in the June PAPER SOURCE JOURNAL.
