A proposed federal rule that some people say could eliminate seller financing for residential real estate is generating concern among investors and the real estate community.

Two years ago, Congress enacted the Secure and Fair Enforcement Mortgage Licensing Act. The SAFE Act is designed to improve the accountability of loan originators, combat fraud and enhance protections that led to the expansion of the real estate bubble. The act directs states to license loan originators, and encourages establishing nationwide mortgage licensing system and registry.

HUD may take the option away for those not licensed as a loan originator under the Federal SAFE MORTGAGE LICENSING ACT. Seller financing can be limited to financing to a relative or your own personal residence ONLY. If you move out of your personal residence then try to offer seller financing you would not be able to. If you own an apartment building and you do not live in it you would be barred from offering seller financing. If you own more than one property you would not be able to offer seller financing.

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