Thread: Real Estate Bill HR 1728 (Big News)

Well it looks like the HR bill 1728 is about to pass the senate. If your unfamiliar with the bill GovTrack: H.R. 1728: Text of Legislation, Referred in Senate it essentially eliminates seller financing on properties unless your willing to jump through the same hoops as a mortgage broker.(Truth in lending, disclosures etc) Also, according to Diane Kennedy's blog a rider will allow the gov't to seize and multi-unit property it deems in risk of default.

That section of the Bill gives the government the right to take your property if you’re in default (a late payment) or RISK of default (and they get to define what risk of default means). The property will then get converted to low income housing.

If this bill passes, as a property owner how will you change what you are doing?

How can they eliminate all seller financing? That sounds unconstituional... If I want to provide a private mortgage, it's my right, no!?

- Hakrjak

It doesn't actually eliminate the seller financing, but it makes it extremely cumbersome to do so if you sell more then 1 property in a 36 month period.

What I find scary is the multi-unit rider.

What I find scary is the multi-unit rider.

Sounds like we are turning more like China every passing day.

Late on your payment? Government steps in and turns it into subsidized housing for cheap labor.

Boycott Walmart my friends.

What I find scary is the multi-unit rider.

Sounds like we are turning more like China every passing day.

Late on your payment? Government steps in and turns it into subsidized housing for cheap labor.

Boycott Walmart my friends.
[ame=http://www.youtube.com/watch?v=-mQH9DloKD8&feature=player_embedded]YouTube - Confessions of a Wal-Mart Hit Man[/ame]

Originally Posted by Bilgefisher

It doesn't actually eliminate the seller financing, but it makes it extremely cumbersome to do so if you sell more then 1 property in a 36 month period.

Basically, it says that if you want to do seller financing, you have to:

- Providing Truth in Lending documentation;
- Abide by RESPA regulation;
- Verify that the borrower is able to repay the loan.

Personally, I think anyone who is seller financing and not willing to do these things is causing more problems for the real estate industry than they're helping, so I'm not sure this is really a big deal.

In fact, most serious investors that I know who do seller financing, do this stuff anyway as part of good business practices.

I agree, but I'm not certain we need more regulation. This may hurt some folks looking for creative financing that would not qualify otherwise. I'm not as versed on the industry as other folks (yet), please correct me if I am wrong.

Whats your opinion on the multi-unit addendum?

Here is the addendum

SEC. 901. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.
(a) Establishment- Subject to subsection (e), the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, shall develop a program to stabilize multifamily properties which are delinquent, at risk of default or disinvestment, or in foreclosure.
(b) Focus of Program- The program developed under this section shall be used to ensure the protection of current and future tenants of at risk multifamily properties, where feasible, by--
(1) creating sustainable financing of such properties that is based on--
(A) the current rental income generated by such properties; and
(B) the preservation of adequate operating reserves;
(2) maintaining the level of Federal, State, and city subsidies in effect as of the date of enactment of this Act; and
(3) facilitating the transfer, when necessary, of such properties to responsible new owners.
(c) Coordination- The Secretary of the Treasury shall in carrying out the program developed under this section coordinate with the Secretary of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Federal Housing Finance Agency, and any other Federal Government agency that the Secretary considers appropriate.
(d) Definition- For purposes of this section, the term ‘multifamily properties’ means a residential structure that consists of 5 or more dwelling units.
(e) Authority- This section shall not limit the ability of the Secretary of the Treasury to use any existing authority to carry out the program under this section.

Originally Posted by Bilgefisher

Whats your opinion on the multi-unit addendum?

Bad for investors, but good for tenants...

As an investor, I'm not happy.

As someone who likes to see paying tenants not get kicked out of their home because their landlord was an idiot, I'm very happy.

I see nothing here about "taking the property and turning it into low income housing"

What it does say is "facilitating the transfer, when necessary, of such properties to responsible new owners."

Seems like a jump to me.

Don't get me wrong. There are portions I don't like. I'm just not a fan for reading something into it that isn't there.

Originally Posted by JScott

Basically, it says that if you want to do seller financing, you have to:

- Providing Truth in Lending documentation;
- Abide by RESPA regulation;
- Verify that the borrower is able to repay the loan.

Personally, I think anyone who is seller financing and not willing to do these things is causing more problems for the real estate industry than they're helping, so I'm not sure this is really a big deal.

In fact, most serious investors that I know who do seller financing, do this stuff anyway as part of good business practices.

Yeah all that stuff is something you should be doing anyway, an attorney and credit check should handle it. A bit more cost, but thats not a problem, just pass it on to the buyer.

OTOH the government taking a multi, if its true is kind of scar. I can see a lawsuite over that one. I suspect the banks won't stand for that for long.

Glad were getting some open discussion on the issue. To be honest, I really don't see the need for this type of legislation.

Whatever happened to "The government that governs least, governs best"? Is this still America? Every time I turn around there are more people piling onto this mindset that more regulation can solve all of our problems.

- Hakrjak

Originally Posted by Bilgefisher

Glad were getting some open discussion on the issue. To be honest, I really don't see the need for this type of legislation.

Originally Posted by hakrjak

Whatever happened to "The government that governs least, governs best"? Is this still America? Every time I turn around there are more people piling onto this mindset that more regulation can solve all of our problems.

Personally, I think it stems from the fact that so many people have taken the "innocent victim" stance since the economic meltdown (everyone from your run-of-the-mill homeowner to the heads of huge corporations), that the government is saying, "Okay, we'll step in and protect you so it doesn't happen again."

People just need to accept responsibility for what happens to them. If they did this, perhaps our politicians would focus on fixing the nation as a whole as opposed to trying to protect individuals.

We're seeing an enabling on the largest scale possible...and it's very sad...

Originally Posted by hakrjak

Whatever happened to "The government that governs least, governs best"? Is this still America? Every time I turn around there are more people piling onto this mindset that more regulation can solve all of our problems.

- Hakrjak

My friend said it best, and the longer I live the more I think he is onto something.

"the average person is a moron"

Originally Posted by hatterasguy

"the average person is a moron"

Yup, and not only that, but roughly half the population is below average...

Originally Posted by JScott

. . . roughly half the population is below average...

Um . . . that would be about 49.999999999%, right?

You math guys . . .

-Russ H.

On the plus side, the tougher it is for others to do deals, the less competition there will be. Maybe this will be one more barrier to entry for many folks.