Section 1 Short title
This Act may be cited as the “Affordable Homeownership Access Act”
Affordable Homeownership Access Act
A BILL
To exempt small seller financers from certain licensing requirements.
Sec. 2 Findings
Congress finds the following:
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.
Seller financers provide financing in lieu of the buyer choosing to obtain a loan from a bank.
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.
It is recognized that seller financers are governed by each State’s particular real estate and consumer protection laws (including ability to repay, deceptive trade practices, and usury laws), as well as State and Federal fair housing and equal opportunity laws.
Neither of those laws described under paragraph (4), nor the amendments made by this Act, are applicable to transactions known as contracts for deed, land installment contracts, lease options, options to buy, or rent-to-own agreements.
Sec. 3 Exception for seller financers with respect to loan originator license or registration requirements
Section 1504 of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5103) is amended by adding at the end the following:
“(c) Exception for seller financers—The requirements of this title shall not apply to the following:
“(1) Real property seller financers—Any person (other than a depository institution) who, during any 12-month period—
“(A) originates no residential mortgage loan or extension of credit secured by real property that (together with any improvements thereto) has a value of more than $200,000 (as calculated based on the principal amount of the loan or extension of credit and the amount of downpayment, if any);
“(B) originates not more than 20 residential mortgage loans or extensions of credit, where—
“(i) each such residential mortgage loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of $200,000 or less (as calculated based on the principal amount of the loan or extension of credit and the amount of downpayment, if any); and
“(ii) at least one of such residential mortgage loans or extensions of credit is secured by real property that (together with any improvements thereto) has a value of more than $100,000 (as calculated based on the principal amount of the loan or extension of credit and the amount of downpayment, if any);
“(C) originates not more than 30 residential mortgage loans or extensions of credit, where each such residential mortgage loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of $100,000 or less (as calculated based on principal amount of the loan or extension of credit and the amount of downpayment, if any); and
“(D) only originates residential mortgage loans or extensions of credit that are with respect to property that is owned by such person.
“(2) Manufactured home seller financers—Any person (other than a depository institution) who, during any 12-month period—
“(A) originates not more than 30 loans or extensions of credit that are primarily for personal, family, or household use and that are secured by a security interest on a manufactured home (as defined under section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974); and
“(B) only originates residential mortgage loans or extensions of credit that are with respect to property that is owned by such person.”
Sec. 4 Exception for seller financers in the definition of mortgage originator
Subparagraph (E) of section 103(dd)(2) of the Truth in Lending Act (15 U.S.C. 1602(dd)(2)) is amended—
by redesignating subparagraphs (F) and (G) as subparagraphs (G) and (H), respectively;
by amending subparagraph (E) to read as follows:
“(E) does not include, with respect to a residential mortgage sale, a person or entity (including a corporation, partnership, proprietorship, association, cooperative, estate, or trust) if—
“(i) such a person or entity provides seller financing, in a 12-month period, for the sale of—
“(I) no property where the loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of more than $200,000 (as calculated based on principal amount of the loan or extension of credit and the amount of downpayment, if any);
“(II) not more than 20 properties, where—
“(aa) each such loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of $200,000 or less (as calculated based on principal amount of the loan or extension of credit and the amount of downpayment, if any); and
“(bb) at least one such loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of more than $100,000 (as calculated based on principal amount of the loan or extension of credit and the amount of downpayment, if any); and
“(III) not more than 30 properties, where each such loan or extension of credit is secured by real property that (together with any improvements thereto) has a value of $100,000 or less (as calculated based on principal amount of the loan or extension of credit and the amount of downpayment, if any); and
“(ii) each piece of real property described under clause (i) is owned by such a person or entity and serves as security for the loan or extension of credit, provided that such loan or extension of credit—
“(I) is not made by a person or entity that has constructed, or acted as a general contractor for the construction of, a residence on the property in the ordinary course of business of such person, corporation, association, estate, or trust;
“(II) is fully amortizing;
“(III) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to pay the seller;
“(IV) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
“(V) meets any other criteria the Bureau may prescribe;”
by inserting after subparagraph (E) the following:
“(F) does not include, with respect to a residential mortgage loan or extension of credit, a person or entity (including a corporation, partnership, proprietorship, association, cooperative, estate, or trust) if—
“(i) the loan or extension of credit is seller financed and is a consumer loan or extension of credit secured by a security interest on a manufactured home (as defined under section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974); and
“(ii) each home described under clause (i) is owned by such a person or entity and serves as security for the loan or extension of credit, provided that such loan or extension of credit—
“(I) is not made by a person or entity that has manufactured the manufactured home;
“(II) is fully amortizing;
“(III) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to pay the seller;
“(IV) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
“(V) meets any other criteria the Bureau may prescribe;”
Sec. 5 Report on seller financing
Study— The Secretary of Housing and Urban Development and the Secretary of the Treasury shall jointly carry out a study on—
the number of homes bought for under $200,000 or 60 percent of the median home value in a given community, whichever is lower, in the United States by utilizing seller financing described under section 2;
the number of homes described under paragraph (1) financed by licensed mortgage brokers or depository institutions;
the potential number of homes described under paragraph (1) which could be financed by licensed mortgage brokers or depository institutions 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, neighborhood stabilization, and family wealth creation through affordable homeownership if more homes are able to be sold utilizing seller financing.
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—
all findings and determinations made in carrying out the study required under subsection (a); and
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.