The new law simply requires that all residential mortgage â??lendersâ?? (maybe thatâ??s me, maybe its not, who cares) provide information to their buyers on predatory lending. Thatâ??s it. Its ten seconds of the closing. Its good information. Iâ??m more than happy to comply. Its an opportunity to point out to my customers that my business is straight up. Its as painless as the Truth In Lending Act Disclosure. Are the courts arguing the constitutionality of that act?
Iâ??m not over-worrying about anything. Why do you insist that I am? This statute shouldn’t and isnâ??t going to stop me or anyone from doing Lonnie deals. I absolutely agree with you. Iâ??m not going to do anything differently because of this law. Iâ??m already doing everything right. I don’t think anyone is accusing me of predatory lending. Its just another piece of paper for the file.
I agree with you, thereâ??s nothing wrong with what we do. You donâ??t have to keep making that point. I donâ??t think anyone in Columbus thinks thereâ??s anything wrong with what we do. Iâ??m sure they have no idea what Lonnie deals even are. I donâ??t think theyâ??re targeting us. I donâ??t think that they think weâ??re crooks. How many laws do you see that only require the crooks to comply, and allow everyone else off the hook? They want everyone to comply, and thatâ??s okay with me.
But maybe Iâ??m being naïve, and I really should be worrying about this. NOW youâ??ve got me wondering!
A new state requirement went into effect this year. We’re now required to provide a copy of the “Ohio Homebuyers’ Protection Act”, and get a signed acknowledgement of receipt of the Act from our buyers. The purpose is to discourage abusive lending practices by loan officers, mortgage brokers, and non-bank lenders (thats us).
I agree with you, John. I believe the authors of this law intended it to apply to folks who actually loan money, versus sellers carry back financing. But I canâ??t find anything in the definitions that make that distinction. Hereâ??s the definition:
“Nonbank mortgage lender” means any person that engages in a consumer transaction in connection with a residential mortgage, except for a bank, savings bank, savings and loan association, credit unionâ?¦(the list goes on for a couple more lines.)
I most decidedly am engaging in a consumer transaction in connection with a residential loan. I think I would have trouble saying that Iâ??m not if I was defending this in court.
But all that aside. Its simply one piece of paper that you give to your buyer, and another piece of paper that they sign that you keep in your file. Its right up there with initially that all the smoke detectors are working. Itâ??s a couple seconds of the closing. It costs nothing to comply.
I actually think thereâ??s a PR benefit to providing your buyer with this info. You hand them the information, explain how youâ??re complying with the law. Kind of like belonging to the Better Business Bureau. Or explaining to a buyer that your loan is simple interest with no pre-payment penalty. It shows that Iâ??m one of the good guys.
Posted by John Merchant on July 02, 2007 at 20:58:09:
Hi Karl
I’m thinking it’s even simpler…if you or I have bought a MH for cash and then sell it on a note, that’s absolutely legal anywhere.
We can sell it for whatever price we want and carry back the note.
So we might buy for $1000 and sell for $10,000 if we have a buyer who’s willing and able…and if we have the B sign off on a release saying he understands the risk and terms, I’m thinking that would defend us in any court anywhere.
Because of the broad way this legislation is written, I might go further in OH and make the B have his lawyer approve of the deal and its terms.
I do this commonly here in WA when there’s any chance the B might come back and holler later and so far no problems.
As long as our interest rate is reasonable and we fully disclose the interest rate and costs, nothing objecttionable by anybody.
Iâ??m not following you. Nothing about this new law is saying that weâ??re doing anything wrong. Theyâ??re just asking â??lendersâ?? to provide their customers with information on predatory lending. Iâ??m okay with that, because Iâ??m not doing any of the things on their list that they say is illegal.
This isnâ??t about buying low and selling high. Everyone is okay with that. Its about lenders writing the terms of a loan knowing that it will wreck the buyer, or over appraising a home to the buyers detriment, or not providing a Truth-In-Lending disclosure, etc.
You actually ask your buyers to take their deal to their lawyer for approval? I would expect that would bring most mobile home deals to a screeching halt.
Re: Its just one piece of paper - Posted by John Merchant
Posted by John Merchant on July 02, 2007 at 22:29:23:
Karl I did read the statute and sorry as its written I predict your courts are going to have endless fun trying to interpret it and judging whether its constitutional or not.
But on straight Lonnie deal you’d be taking the buyer’s note for whatever price you & he agreed upon and no smart seller would have any buyer buy on any unreasonable terms he couldn’t meet.
And no, I certainly do NOT have every deal scrutinized by buyer’s lawyer, but do on occasion make the B get his lawyer’s written opinion as to its legality so as to silence that lawyer and his client later on…no way they can jump me later if they’ve both approved first, is there?
But I think you’re over-worrying if this statute stops you or anybody else from doing straight Lonnie deals as you, me, the guy next door, everybody has the right to sell anything we own for any price to anybody.
Of course it’s intended to hamper the lender and mtg broker who don’t care who they hurt but that’s not what we as Lonnie dealers are doing, is it, when we sell a MH to somebody who can’t otherwise afford to own his own home?
When you said, in your original post that the new law was aimed at YOU, I was disputing that and still do.