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 owner 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 owner, receives the deed or title to the home and then makes installment payments to the owner over a defined period of time.
Owner financers provide financing in lieu of the buyer choosing to obtain a loan from a bank.
The owner finance industry consists of small business owners who own real estate and provide financing on those properties to underserved buyers who cannot or would prefer not to obtain traditional bank or loan based financing.
Owner financers are governed by real estate and consumer protection laws (including, but not limited to, ability to repay, deceptive trade practices, and usury laws) of each State, as well as State and Federal fair housing and equal opportunity laws.
Using owner financing will benefit home values, increase neighborhood stabilization, and assist with family wealth creation through increased homeownership as more homes are sold with owner financing.
None of the amendments made by this Act, are applicable to transactions known as Contracts for Deed or Land Installment Contracts that are not lawfully recorded, Lease Options, Lease with Option to buy and Rent to Own.
Sec. 3 Exception for owner 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 owner financers—The requirements of this title shall not apply to any person (other than a depository institution) who—
“(1) extend credit with respect to not more than 24 residential mortgage loans in a 12-month period; and
“(2) only extend credit with respect to residential mortgage loans that are with respect to property that is owned by such person.”
Sec. 4 Exception for owner 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 owner financing, in a 12-month period, for the sale of 24 properties; 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 owner determines in good faith and documents that the buyer has a reasonable ability to pay the owner;
“(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 rule;”
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 owner 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 owner determines in good faith and documents that the buyer has a reasonable ability to pay the owner;
“(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 rule;”
Sec. 5 Report on owner 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 $150,000 or 60 percent of the median home value in a given community, whichever is lower, in the United States by utilizing owner financing;
the number of homes described under paragraph (1) financed by licensed mortgage brokers;
the potential number of homes described under paragraph (1) which could be sold but aren’t, because owner 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 were to be sold utilizing owner finance.
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 owner financing 20 years, 15 years, 10 years, and 5 years prior to the date of the enactment of this Act.