Phil Querin Q&A: Selling Homes and Working With a Third Party Mortgage Banker & the SAFE ACT

Want access to MHCO content?

For complete access to forms, conference presentations, community updates and MHCO columns, log in to your account or register.

December 19, 2011

Question*: If a community owner sells one or more homes (e.g. those received via abandonment or pre-abandonment) with the help of a Mortgage Loan Originator (“MLO”) working for a third party mortgage banker or mortgage broker, after the buyer’s installment contract is completed and signed, can the community owner then collect the payments himself? In other words, now that MLO has complied with the SAFE Act, can this receivable be returned to the community owner to collect the monthly payments? My concern is that someone might say that since the owner is now receiving the payments, he is engaged in the business of “loan servicing” - even though it’s his own home; he’s not in the lending or servicing business; and not receiving or expecting compensation for the act of servicing). It could pose a real financial hardship on community owners if they had to pay a third party for servicing that they can do themselves. The primary reason park owners do this is to fill vacant homes, not to make big money on the sale itself.

Answer: Per the Oregon Department of Community and Business Services, “…there is definitely no license for that.” [Note: This answer may not apply if the community owner is collecting the payments for an unrelated third party who holds the installment contract. PCQ]

Comment: The above question supplements the FAQs posted by MHCO regarding the SAFE Act earlier this month. According to the Oregon Department of Community and Business Services (“DCBS”), the Act applies to manufactured community owners who sell homes acquired following abandonment or pre-abandonment. Accordingly, an owner who provides financing by carrying back an installment contract, will have to either become licensed as a Mortgage Loan Originator (“MLO”) or hire - as an employee or independent contractor - a third party MLO to perform the credit component of the transaction.

Location Tags: