The End of Seller Financing – HB 10

TREC Legal Update Course & Text

On January 19th, 2010, we attended a TREC legal update course which informed us HB 10 – New Registration for Mortgage Originators – Texas Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) has effectively ended seller financing.  The room of agents and brokers was in uproar.  When the clamor subsided, the TREC licensed instructor explained that House Bill 10 was passed to comply with SAFE under which all residential mortgage loan orginators who are not employees or subsidiaries of a depository institution who are “registered with the federal banking agency having jurisdiction over that institution” are subject to state licensing and regulation.  The definition of residential loan originator does not include:

*a person who performs solely administrative or clerical tasks on behalf of the residential loan originator,
*a person who performs only real estate brokerage activities unless that person is compensated by a lender or agent of the lender
*a person who is involved solely in providing extensions of credit related timeshare plans

The definition DOES include private investors who provide their own financing. The only exception to seller financing, the instructor explained, was loans between family members. If this is the case, many of us asked, why do we still see owner financing advertised all over town? To which there was no good answer. It’s possible that this information is too new and not yet widely enforced.

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