Why Save Owner Financing From HR 1728?

Owner financing has provided a safe harbor for buyers and sellers battered by the tsunami waves of the mortgage and real estate crisis.

Rather than embracing the safety net offered by private parties the government wants to severely restrict the owner financed installment sale.

In May NoteInvestor.com reported the potential disaster that would ensue if the current version of HR 1728 The Mortgage Reform and Predatory Lending Act was enacted (Read: How Congress Wants to Change Seller Financing).

The response and concern has been encouraging with many readers requesting sample letters to use in communication with their State Senator.

We are pleased to share this sample letter provided by Clint Hinman, Editor of the NoteWorthy Newsletter:

Sample Letter – Please Vote No on HR 1728

Dear Senator [name];

My name is Clint Hinman and I have been a resident of Washington since 1993.

I am writing to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.

While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private property owners in the Act (see section 101(3)(e)) will enormously reduce the housing choices of Washingtonians and the ability of homeowners to sell properties in a market already languishing from an abundance of unsold properties.

As someone who buys and brokers owner financed notes, I encounter hundreds of instances every year where home sellers and buyers came to an agreement for an installment sale on a property that the owner desperately needed to sell (often to avoid foreclosure) and the buyer desperately wanted to buy, but could not raise the down payment needed for conventional financing.

In every situation, these sales were win-win deals for the buyer and seller:  The seller was able to get rid of an unwanted property to a buyer who loved it, and the buyer was able to get a new home at an affordable payment and interest rate with none of the usual costs (points, application fees etc) inherent in conventional mortgage transactions.

In Washington, these transactions are already regulated by state law.  A low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.

In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market, which is often the only option for many sellers to sell and buyers to buy right now.

PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them – -they do not cause the problems this bill seeks to solve. They do not originate these notes to sell to government-sponsored entities (Fannie Mae, Freddie Mac, FHA, etc.), but instead hold them as investments, often as a source of long-term income.  HR 1728 would be extremely harmful to thousands of your constituents if passed as currently worded.

This legislation will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.

Thank you for your consideration.

Respectfully,

[Name and Contact Information]