Do you know if you created more than 3 seller financed notes in a year, you are considered a bank and have many reporting requirements? While Dodd-Frank wanted to protect consumers, it had a major impact on the seller finance market. See what the Seller Finance Coalition is doing to help repeal parts of Dodd-Frank. |
Background
The Seller Finance Coalition (SFC) is a group advocating to enhance home ownership for all Americans. Seller financing serves consumers who are often overlooked or excluded by conventional lenders. Seller financing offers a vital path to homeownership for hardworking individuals who struggle to meet increasingly strict bank-loan requirements. Ultimately, seller financing provides affordable options that empower more Americans to achieve the dream of homeownership.
Seller Financing opens Home Ownership to more Americans
Large financial institutions set their own underwriting standards, which often exclude applicants with steady employment but non-traditional income (such as self-employed workers), as well as borrowers seeking lower-value loans—typically under $100,000—that banks are less willing to originate. Private lenders fill this gap, making it possible for borrowers to access smaller loans and to qualify despite having non-W2 income or imperfect credit in need of repair.
Removing Limitations on Seller Financing set by Dodd Frank
Although the government shutdown has delayed sessions this year, the coalition has gained sponsors and reintroducing a bill titled “The Affordable Homeownership Access Act.” If passed, the bill would increase the private-lender loan creation limit from the current cap of three loans per year to twenty-four loans per year. This expanded allowance would enable private lenders to offer affordable homeownership opportunities to the many Americans who do not qualify for traditional bank loans. It is a practical, market-based solution to the housing crisis—one that allows buyers and sellers to negotiate terms that meet their unique situations.
The Affordable Homeownership Access Act would allow property owners to offer financing directly to buyers while preserving essential consumer-protection safeguards. Private lending remains fully subject to federal and state real estate laws, consumer protection regulations, and fair housing requirements. Additionally, seller-financed transaction fees are greatly reduced and sometimes eliminated compared to the high fees associated with traditional mortgage origination, making home loans more affordable overall. By reducing barriers for private lenders and allowing more loan transactions each year, the bill would expand access to homeownership for underserved consumers nationwide.
Summary
With the introduction and hopeful passage of the “The Affordable Homeownership Act” the increase of the private-lender loan limit would enable this sector to support even more families seeking a pathway to owning a home. Consumers deserve options—and a real chance at homeownership. The Affordable Homeownership Access Act would expand those options and empower more Americans to build stability through homeownership.
Seller Finance Coalition Information
To learn more about the Seller Finance Coalition, visit their website at https://sellerfinancecoalition.org/. The site also provides simple instructions on how to support the initiative by contacting your U.S. House Representative (Get Involved – Seller Finance Coalition) or by contributing to the cause.
Presenter-Jeff Watson
Jeffery S. Watson is an Ohio attorney who has had active trial and hearing practice for over 30 years. Jeff is a nationally recognized authority regarding regulatory concerns with wholesaling. In his home state of Ohio, he has worked with the Ohio Division of Rea Estate and nationally with ARELLO regarding the legality of wholesaling.
From 2010 to present, Jeff has led lobbying efforts in Washington, DC on behalf of real estate investors which has brought about several changes in both government regulation and policy on distressed property purchases and resales. In 2014 and 201 5, his efforts on Capitol Hill helped bring about change in the U.S. Tax Code and helped reinstate the Mortgage Debt Forgiveness Act. He also met with FHFA regarding disposition of defaulted notes and mortgages in a bulk format. In 2016, Jeff met with the Consumer Financial Protection Bureau regarding regulating land installment contracts, and he has been working to secure passage of the Affordable Homeownership Access Act in the past three sessions of Congress.
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