The SAFE Act


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Barry Watts shared an email he sent to a local staff member in his Congressman’s office. This is the best explanation I have seen regarding the SAFE Act, and the provision that is harmful to real estate in general. Thanks to Barry for letting me share this part of his email:

Representative Barney Frank is sponsoring legislation called the Consumer Financial Protection Act (I think it is referred to as the SAFE Act). Chris Dodd is sponsoring the Senate version. This legislation would require anyone who owns real estate and sells through owner financing to be a licensed mortgage broker if they sell more than one piece of property every 36 months. That means if your Mom & Dad have their house, and the rent house they bought 20 years ago, and the house they inherited from Grandma and Grandpa and they want to sell all three of them and move to Florida and retire, if they chose to let the buyers purchase the property over time (through a promissory note and deed of trust, a contract for deed, or a lease-purchase) that they’d have to wait SIX YEARS to be able to sell all three properties. Imagine Jack, if your Mom & Dad had been good investors and accumulated 20 rental houses over the years. This legislation means that if they wanted to owner finance the sale of those 20 houses to fund their retirement, they’d have to sell them over a period of SIXTY YEARS!!!

 Why, you might ask would you Mom & Dad want to owner finance this property to a new buyer? It’s very simple, Jack. Right now banks are paying about 2% interest on Certificates of Deposit. So if your parents sold a property and took the proceeds of that sale and put it in the bank they’d earn 2%. But they could "leave" the money in the property and let the new buyer pay for it over time and earn 6% or 7% for loaning the money to the new buyer. I’m a Certified Financial Planner Jack, this is a no brainer. If this were your parents they absolutely SHOULD leave the money in the property and earn the higher rate of interest rather than taking the proceeds and putting the money into a bank CD. But they aren’t going to have that choice if Barney Frank gets his way. 

 Jack, I’m a real estate dealer. I buy and sell approximately 100 properties per year through our WeBuyUglyHouses company. This is what we do professionally, for a living, and we are very good at it. Sometimes we sell a piece of property with owner financing. The notion that we (or your parents) should have to be a licensed mortgage broker to sell our own property and invest our own money is ludicrous! I bear nothing but contempt for the brains behind this legislation and for anyone who’d vote for it. It represents an unnecessary intrusion of the federal government into a perfectly legal, moral, ethical, and common-sensical, private business transaction. So long as the taxes are paid, the government has no business sticking its nose into the citizen’s affairs in this way.

 Jack, we need Roy’s help. Would you please bring this matter to his attention? Express my appreciation to him for his communication with the EPA over their goofy new lead paint edict, and ask him to help us get the SAFE Act stopped! Dead! Now!

 It’s all a matter of jobs. Over 50 people in our district are employed, paying taxes, and keeping a roof over their head because we rehab houses. But with the EPA’s handcuffs on our rehab efforts, and Barney Frank’s hamstringing of our sales efforts, each of those 50 families is just that much closer to the welfare line because we can’t continue to bear the weight of the government on our back. 

 Help us, Jack. Please talk with the Congressman.

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