Owner Financing - New Rules for Small LandlordsThe rules for owner financing have just changed. Mortgage fraud was one of the contributing factors in the recent financial crisis.  In 2008, Congress passed the SAFE Act, hoping to clean up the mortgage mess by requiring lenders to be licensed (like Realtors).  This new law has had unintended consequences for those of us who are small “rent house ranchers”.

It used to be possible to sell a rental unit by owner-financing the property, as long as the owner did no more than five such transactions each year.  The result was often a financial win/win for both buyer and seller.

Unfortunately, this is no longer possible.  According to the new legislation, an unlicensed owner may only self-finance a property

  • if it is his homestead, or
  • if he is selling it to a family member.

For more details, call me (832-483-2636) and I will send you a full copy of the May 2010 article in Texas Realtor magazine.

Roger Martin