HUD Extends Comment Period for Proposed SAFE Act Rules

Assistant Secretary for Housing David H. Stevens announced yesterday that HUD is extending the public comment period on its proposed rule on the Secure and Fair Enforcement Mortgage Licensing Act (SAFE) Act to March 5, 2010. HUD’s SAFE Actproposed rule published in the Federal Register on December 15, 2009, and the public comment period was originally scheduled to close on February 16, 2010. There has been quite a bit of concern brought up regarding HUD’s rule and how it will impact seller financing for homes that are not the residence of the seller. Paragraph F of the proposed rule discusses who would not be subject to the licensing requirements. Among other exemptions, HUD specifically indicates that a seller who is financing the sale of his/her own residence would be exempt from licensing requirements. However, HUD’s rule does not provide the same exemption for a property owner who is selling a home that is not the seller’s residence. The rule states: “The commercial context implied by the taking of an ‘‘application’’ is also absent where an individual seller provides financing to a buyer pursuant to the sale of the seller’s own residence. The frequency with which a particular seller provides financing is so limited that HUD’s view is that Congress did not intend to require such sellers to obtain loan originator licenses. Accordingly, this rule would provide in § 3400.103(e)(5) that such individuals are not subject to State licensing requirements.” Your NARPM® Governmental Affairs Committee wanted to ensure that you had access to all the pertinent information on this issue. We have provided additional background on the SAFE Act below. If you would like to submit a comment on HUD’s proposed rule for the SAFE Act, click here to visit regulations.gov. If you, as a property manager, work with any investors, you might consider passing this information on to them for their input as well. BACKGROUND ON THE SAFE ACT As published in a December 15th, 2009 press release from HUD, The SAFE Act was enacted into law on July 30, 2008, as part of the Housing and Economic Recovery Act of 2008. It is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. SAFE also mandates the creation of a Nationwide Mortgage Licensing System and Registry (NMLSR), and encourages all states to provide for a licensing and regulatory regime for all residential mortgage loan originators. While states are charged with enacting licensing standards that meet the requirements of the SAFE Act, overall responsibility for interpretation, implementation, and compliance rests with HUD. If HUD determines that a state’s licensing standards do not meet the minimum requirements of the Act, it is required to implement and administer a licensing system for that state. 638 Independence Parkway, Suite 100, Chesapeake, VA 23320 P: (800) 782-3452 | F: (866) 466-2776 | info@narpm.org