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Selling your home the fastest way possible and for the highest price is becoming more risky as a result of new federal legislation becoming effective in January, 2014.
The new legislation is the seller finance provision of Dodd-Frank Wall Street Reform and Consumer Protection Act, which will become effective Jan. 10, 2014. And the fastest way to sell a house for top dollar is seller finance, which has always carried a risk of the buyer defaulting on payments.
Seller financing is a method of selling a home in which the seller assumes the role of the bank and holds a note or a mortgage and a note. The buyer may make a down payment and then monthly payments to the seller. Since there is no bank there is no need for an appraisal or lengthy loan approval and the buyer and seller can close the transaction with the assistance of a title company or attorney.
Eliminates the Middle Man
Since there is no appraisal, the price is whatever the two parties agree on and a sale can take place as soon as the title agent can determine the seller has a good title to the home.
And while faster and cheaper than selling with bank financing, seller financing holds the risk the buyer will not pay, requiring the seller to seek legal assistance and foreclose on the mortgage, which is costly and with uncertain—many times seriously bad—consequences.
While Dodd-Frank is not as strict on people selling one house a year as it is “professionals,” the new law requires individual home owners to meet certain requirements of the law and provides extremely heavy financial penalties for failure to take the required actions.
All Sellers Should Be Informed
All homeowners considering seller financing under the new law should seek the assistance of a board certified real estate attorney, especially since penalties even without legal fees can range easily into the thousands of dollars.
Dodd-Frank, which supposedly is designed to protect the very people who are now at increased risk, comes at a time when less than 20 per cent of the United States population is able to get a bank loan. Owner financing with seller carry back mortgages should be available to make up for the lack of bank financing, however at a much greater risk than it would normally carry.
Even with the greater risk, seller financing may still be used by homeowners who are aware of the new law and know how to mitigate the risk.
Advanced Realty Team, will still offer the service to by houses with seller finance from owners who want to sell fast and at top dollar and offer certain safeguards to the seller to avoid violation of the law and its penalties.
This is based on information be believe to be correct and know it may change and should not be relied on for transactions of real estate. Consult with a board certified real estate attorney in buying and selling with seller finance. (Listed below are certain limited provisions of the act. For a more thorough coverage CLICK HERE And for all 949 pages CLICK HERE)
Everyone Must Meet These Rules:
1. Note can not have a balloon.
2. Interest Rate Fixed for 5 Years.
3. Seller Must Qualify the Buyers, and at a minimum creditors must consider:
A. Current or reasonable expected income or assets.
B. Current Employment status.
C. Monthly payments on covered transaction.
D. Monthly payment on simultaneous loan(s), if any.
E. Current debt, alimony and child support.
F. Monthly debt-to-income ratio.
G. Credit History.