Affordable Homeownership Access Act

I 118TH CONGRESS 1ST SESSION H. R. 3464 To exempt small seller financers from certain licensing requirements. IN THE HOUSE OF REPRESENTATIVES MAY 18, 2023 Mr. BARR (for himself, Mr. VICENTE GONZALEZ of Texas, Mr. POSEY, and Mr. CUELLAR) introduced the following bill; which was referred to the Committee on Financial Services A BILL To exempt small seller financers from certain licensing requirements. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Affordable Homeown- 4 ership Access Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) Real-estate owner financing is a transaction 8 in which the owner of a real estate property provides 9 financing for the buyer of that property and the 10 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3464 IH buyer makes some form of a down payment to the 1 owner, receives the deed or title to the home and 2 then makes installment payments to the owner over 3 a defined period of time. 4 (2) Owner financers provide financing in lieu of 5 the buyer choosing to obtain a loan from a bank. 6 (3) The owner finance industry consists of 7 small business owners who own real estate and pro- 8 vide financing on those properties to underserved 9 buyers who cannot or would prefer not to obtain tra- 10 ditional bank or loan based financing. 11 (4) Owner financers are governed by real estate 12 and consumer protection laws (including, but not 13 limited to, ability to repay, deceptive trade practices, 14 and usury laws) of each State, as well as State and 15 Federal fair housing and equal opportunity laws. 16 (5) Using owner financing will benefit home 17 values, increase neighborhood stabilization, and as- 18 sist with family wealth creation through increased 19 homeownership as more homes are sold with owner 20 financing. 21 (6) None of the amendments made by this Act, 22 are applicable to transactions known as Contracts 23 for Deed or Land Installment Contracts that are not 24 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3464 IH lawfully recorded, Lease Options, Lease with Option 1 to buy and Rent to Own. 2 SEC. 3. EXCEPTION FOR OWNER FINANCERS WITH RE- 3 SPECT TO LOAN ORIGINATOR LICENSE OR 4 REGISTRATION REQUIREMENTS. 5 Section 1504 of the S.A.F.E. Mortgage Licensing Act 6 of 2008 (12 U.S.C. 5103) is amended by adding at the 7 end the following: 8 ‘‘(c) EXCEPTION FOR OWNER FINANCERS.—The re- 9 quirements of this title shall not apply to any person 10 (other than a depository institution) who— 11 ‘‘(1) extend credit with respect to not more 12 than 24 residential mortgage loans in a 12-month 13 period; and 14 ‘‘(2) only extend credit with respect to residen- 15 tial mortgage loans that are with respect to property 16 that is owned by such person.’’. 17 SEC. 4. EXCEPTION FOR OWNER FINANCERS IN THE DEFI- 18 NITION OF MORTGAGE ORIGINATOR. 19 Subparagraph (E) of section 103(dd)(2) of the Truth 20 in Lending Act (15 U.S.C. 1602(dd)(2)) is amended— 21 (1) by redesignating subparagraphs (F) and 22 (G) as subparagraphs (G) and (H), respectively; 23 (2) by amending subparagraph (E) to read as 24 follows: 25 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3464 IH ‘‘(E) does not include, with respect to a 1 residential mortgage sale, a person or entity 2 (including a corporation, partnership, propri- 3 etorship, association, cooperative, estate, or 4 trust) if— 5 ‘‘(i) such a person or entity provides 6 owner financing, in a 12-month period, for 7 the sale of 24 properties; and 8 ‘‘(ii) each piece of real property de- 9 scribed under clause (i) is owned by such 10 a person or entity and serves as security 11 for the loan or extension of credit, provided 12 that such loan or extension of credit— 13 ‘‘(I) is not made by a person or 14 entity that has constructed, or acted 15 as a general contractor for the con- 16 struction of, a residence on the prop- 17 erty in the ordinary course of business 18 of such person, corporation, associa- 19 tion, estate, or trust; 20 ‘‘(II) is fully amortizing; 21 ‘‘(III) is with respect to a sale 22 for which the owner determines in 23 good faith and documents that the 24 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3464 IH buyer has a reasonable ability to pay 1 the owner; 2 ‘‘(IV) has a fixed rate or an ad- 3 justable rate that is adjustable after 5 4 or more years, subject to reasonable 5 annual and lifetime limitations on in- 6 terest rate increases; and 7 ‘‘(V) meets any other criteria the 8 Bureau may prescribe by rule;’’; and 9 (3) by inserting after subparagraph (E) the fol- 10 lowing: 11 ‘‘(F) does not include, with respect to a 12 residential mortgage loan or extension of credit, 13 a person or entity (including a corporation, 14 partnership, proprietorship, association, cooper- 15 ative, estate, or trust) if— 16 ‘‘(i) the loan or extension of credit is 17 owner financed and is a consumer loan or 18 extension of credit secured by a security 19 interest on a manufactured home (as de- 20 fined under section 603 of the National 21 Manufactured Housing Construction and 22 Safety Standards Act of 1974); and 23 ‘‘(ii) each home described under 24 clause (i) is owned by such a person or en- 25 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3464 IH tity and serves as security for the loan or 1 extension of credit, provided that such loan 2 or extension of credit— 3 ‘‘(I) is not made by a person or 4 entity that has manufactured the 5 manufactured home; 6 ‘‘(II) is fully amortizing; 7 ‘‘(III) is with respect to a sale 8 for which the owner determines in 9 good faith and documents that the 10 buyer has a reasonable ability to pay 11 the owner; 12 ‘‘(IV) has a fixed rate or an ad- 13 justable rate that is adjustable after 5 14 or more years, subject to reasonable 15 annual and lifetime limitations on in- 16 terest rate increases; and 17 ‘‘(V) meets any other criteria the 18 Bureau may prescribe by rule;’’. 19 SEC. 5. REPORT ON OWNER FINANCING. 20 (a) STUDY.—The Secretary of Housing and Urban 21 Development and the Secretary of the Treasury shall 22 jointly carry out a study on— 23 (1) the number of homes bought for under 24 $150,000 or 60 percent of the median home value 25 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3464 IH in a given community, whichever is lower, in the 1 United States by utilizing owner financing; 2 (2) the number of homes described under para- 3 graph (1) financed by licensed mortgage brokers; 4 (3) the potential number of homes described 5 under paragraph (1) which could be sold but aren’t, 6 because owner financiers are unwilling, or from a 7 practical standpoint unable, to comply with mort- 8 gage broker rules; and 9 (4) the potential benefit to home values and 10 wealth creation if more homes were to be sold uti- 11 lizing owner finance. 12 (b) REPORT.—Not later than the end of the 1-year 13 period beginning on the date of the enactment of this Act, 14 the Secretary of Housing and Urban Development and the 15 Secretary of the Treasury shall jointly issue a report to 16 the Committee on Financial Services of the House of Rep- 17 resentatives and the Committee on Banking, Housing, and 18 Urban Affairs of the Senate containing— 19 (1) all findings and determinations made in car- 20 rying out the study required under subsection (a); 21 and 22 (2) data on the number of transactions utilizing 23 owner financing 20 years, 15 years, 10 years, and 24 VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3464 IH 5 years prior to the date of the enactment of this 1 Act. 2 Æ VerDate Sep 11 2014 04:33 Jun 03, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H3464.H H3464 kjohnson on DSK79L0C42PROD with BILLS