Estate Planning is really about peace of mind. What estate planning is all about is finding the righ...

1. S.a.f.e. Act Overview And Its Effects On Real Estate Investing
Estate Planning is really about peace of mind. What estate planning is all about is finding the right
devices to implement your basic requirements. What that implies is that we use the most
sophisticated legal documents to appropriately implement your desires. We customize each and
every strategy so that you get exactly what you desire. We do this utilizing the most up to date
devices so that we can prepare a personalized plan at the most affordable possible cost. Please call
us today with any questions.
The S.A.F.E. (Secure and Fair Enforcement for Mortgage Licensing) Act is very broad and it's rules
are almost constantly being changed by our politicians to hopefully improve it to become more
reasonable to real estate professionals than what is allowed in its present form.
Key features of the S.A.F.E. Act include:
This Act requires nationwide registration/licensing of any residential mortgage lender who offers or
negotiates terms of a residential mortgage loan for compensation or gain. As investors, that would
be us when we sell using seller financing and it would be sellers who sell to us via seller financing.
This Act prohibits the seller financing of a residential property without being licensed as a mortgage
loan originator. This includes selling with wraparounds, land contracts, seller 2nds, etc. This applies
to people who assist in this process (investors) and hard money lenders who take back real estate as
collateral.
Implications Of The S.A.F.E. Act To Real Estate Investors And Lenders
Most lending that was previously unregulated or loosely regulated is now regulated by the S.A.F.E.
Act. This includes hard money lending, seller "carrybacks" (seller 2nds), and independent mortgage
loan originations. The S.A.F.E. Act is a federal law. While it imposes a general umbrella of regulation
and requires meeting certain minimum requirements, it is up to each state to impose its own
interpretation of the rules set forth in this https://www.youtube.com/watch?v=Y88Hx3bx2vw Act.
Most states have already implemented their own interpretations of the S.A.F.E. Act. Ironically, the
federal government's attempt to uniformly regulate mortgage lending has resulted in non-uniform
regulations from state to state. Some states, such as Texas, have enacted laws that are even more
restrictive than what is in the S.A.F.E. Act itself. Other states have enacted legislation that meets
just the minimum requirements of the S.A.F.E. Act or have legislation that is very open to different
interpretations so as to be almost useless.
The S.A.F.E. Act is intended to curtail the lending abuses in subprime loans that greatly contributed
to the present mortgage mess and difficulties in the residential credit markets by more strictly
regulating the financial derivatives that originated from subprime loans such as CDO's
(collateralized debt obligations) and CDS's (credit default swaps, i.e., insurance for defaults on these
loans). But it also restricts and governs activities of those who have nothing to do with subprime
lending and hinders the sale of residential properties that would normally be facilitated by seller
financing. In the federal government's attempts to prevent another recession in the residential
markets by more strictly regulating lending guidelines, it will most likely fail by making residential
properties more difficult to sell by restricting seller financing. By restricting seller financing to the

2. people who need it the most, the irony is that the S.A.F.E. Act hurts the very people that it was
intended to help.
Ways For Real Estate Investors Use Seller Financing Without Breaking S.A.F.E. Act Laws
1. Get licensed as a mortgage loan originator. 2. Qualify for applicable exemptions from S.A.F.E. Act
laws. 3. Have a licensed mortgage loan originator do all your paperwork for seller financing.
Possible Exemptions from S.A.F.E. Act Laws Exemptions can be at the federal or state levels. It may
be possible to also say that something is exempt just because it is not prohibited by the Act. Recent
Dodd-Frank Amendments (federal amendments) seem to say that sellers can make a maximum
http://estate-planning.laws.com/ of three (3) residential mortgage loans per year on properties
owned by the sellers, i.e., sellers are allowed to sell up to three (3) residential properties with seller
financing per year. A restriction is that this exemption is not allowed is the seller is a contractor who
builds the house and then provides seller financing to sell it. Also, seller financed loans in this
exemption must be fully amortizing, i.e., no interest-only loans. Other requirements include that the
seller qualify the buyer with a minimum of credit report and income verification on record, and the
loan must be have a fixed interest rate or a "reasonable" adjustable rate that does not increase for at
least the first five (5) years of the loan term.
At the federal level, the S.A.F.E.Act does not appear to prohibit a balloon payment or an escalating
payment schedule as long as the principal is paid down completely by the end of the loan term.
At the state level, registered financial institutions and their wholly-owned subsidiaries or holding
companies appear to be exempt from S.A.F.E. Act laws. Another exemption is if you are originating
non-residential, i.e., commercial or business, loans. In contrast to the federal Dodd-Frank
Amendments that allow up to three (3) residential properties per year to be seller financed without a
license, state exemptions appear to allow up to five (5) residential properties in a consecutive 12-
month period to be seller financed without a license, but this should be checked on a state-by-state
basis since each state has its own rules and interpretations of the S.A.F.E. Act.
Other exemptions from S.A.F.E. Act laws at the state level include seller financing by
federal/state/municipal government agencies, any employee or employer pension plan making
mortgage loans only to participants, anyone acting in a fiduciary capacity as conferred by the courts,
and anyone negotiating residential loan terms for immediate family members. Creative Exemptions
From S.A.F.E. Act Laws (Exempt For Now - But Could Change Soon)
1. Forming a 501(c) non-profit organization to provide seller financing could qualify for exemption
exempt since non-profit organizations that provide loans to promote education or home ownership
don't fall under S.A.F.E. Act rules. Government money gurus have been recently teaching that
forming your own non-profit organization could help in obtaining grants. Exemption from the
S.A.F.E. Act is another benefit to forming one.

3. 2. Another exemption is if you are selling to a business for non-residential purposes. For example, as
long as the rehabbers don't move into and live in the properties you flip, these are non-residential
properties that you can sell to them with seller financing. This also applies to hard money loans that
would use these properties as collateral as long as the rehabbers don't move into and live in them.
3. Employ a multiple-entity strategy. Each entity can sell up to three (3) properties with seller
financing per year so you could use multiple entities to sell residential properties. Multiple entities
for possible use include you, a relative of yours, LLC's (limited liability companies), corporations,
partnerships, IRA's (individual retirement accounts), land trusts, living trusts, etc. The use of a land
trust or LLC for this strategy should be done only after consulting with an attorney since some states
may not recognize revocable trusts or single-member/family-owned LLC's as separate statutory
entities (e.g., South Carolina, does not recognize single-member LLC's or LLC's that are entirely
family-owned as asset protection vehicles).
4. Other exemptions to S.A.F.E. Act rules include selling your personal residence, selling to a family
member (but it is not recommended to marry someone just to sell a property to him or her), and
selling through an attorney since, as of this writing, attorneys are exempt from S.A.F.E. Act rules.
5. Use of land contracts and extended escrows but while some states don't consider these to be
completed sales, other states consider these to still be sales so this exemption should be considered
only on a state-by-state basis. Some states will allow assignment of beneficial interest in a land trust
without calling it a completed sale thereby qualifying as an exemption from the S.A.F.E. Act. The
same is true with lease-options in that these don't qualify as being completed sales and, as such, are
exempt from S.A.F.E. Act laws.
6. Equity sharing can also be a "non-loan" way to have a residential property seller financed to you,
or you to an end buyer, with the effect being that of a "carryback" by the seller.
7. Sell to a LLC, use seller financing to "carryback" a note from the LLC, and then sell the
membership interests in the LLC to an end buyer. When done properly, the collateral is not the real
estate but rather the shares of the LLC become the collateral for the seller financing.

4. In conclusion, before entering into any creative
real estate investing transaction, always have it
reviewed by a real estate attorney to ensure you
stay compliant.
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verview-And-Its-Effects-On-Real--
state-Investing/2182895
Lastly, estate preparation is regarding assurance. The process itself is quite vital and also can assist
you develop an excellent, strong functioning strategy that will care for you, your kids, and also your
possessions in instance of your fatality or disability.