Despite a slow economy and tightening of credit in business and home lending, the big hand of big government is proposing to destroy owner-financed home sales. It's amazing how out of touch bureaucrats are when it comes to the economy.
Today, American property owners can self-finance the sale of up to five homes a year without a mortgage originator license. The new proposal by HUD called the Safe Mortgage Act would allow owners to only sell a home that the seller actually occupies - otherwise, he or she would have to get a mortgage originator license.
If this act passes, it will essentially dismantle private market competition, while eliminating an entire segment of home buyers. This will surely put more downward price pressure on an already shaky housing recovery.
Many properties in need of extensive repair don't qualify for traditional mortgage financing from banks and lenders due to property condition or age. Also, some individuals have situations which prevent them from qualifying for a traditional mortgage. With tighter lending standards, a luke-warm economy, and a huge pipeline of foreclosures, I don't see how eliminating a huge segment of home buyers will help housing recover.
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