Sign New York Terms of Use Agreement Safe

Document type sign terms of use agreement new york safe

- Well hey there, this is Seth and in this video, I'm gonna be covering something called, the SAFE Act. And, specifically how the SAFE Act does or doesn't apply to vacant land transactions that involve seller financing. Now, just some quick history on the SAFE Act if you've never heard of it or if you're just totally unfamiliar with it. The SAFE Act was a piece of legislation that Congress passed and the president signed back in late 2008. And it was basically part of a larger housing and economical recovery act of 2008 which came in response to the big subprime mortgage crisis. You may remember it, it was kind of a rough time for real estate in general. But, basically the idea behind this act was ultimately to require all 50 states to implement a mortgage load originator licensing and registration system. And the tricky thing about the SAFE Act is that each of the 50 states sort of has to implement this for themselves. What that means is that one state's specific SAFE Act requirements may differ a little bit from another state's. States are kind of free, sort of to come up with their own versions, as long as they fit inside the box, set by Regulation G, which is just another name for the SAFE ACT. Now basically what this meant for a lot of real estate investors out there specifically those who were using seller financing to sell their properties was that, a lot of them, in order to continue doing that on a large scale, they had to essentially become licensed mortgage loan originators. Which is really not the business that the typical real estate investor's in. A real estate investor is out there to find great deals and bring value to the marketplace. Not to become a licensed mortgage loan originator. That's just not part of the package that we all sign up for when we do this. And what it basically meant was that a lot of real estate investors were gonna have to say "bye bye" to their ability to offer seller financing on dozens of properties each year because they just wouldn't be able to do that without becoming a licensed mortgage loan originator which they just didn't wanna sign up for. Now, I remember back in the time when this all happened I was really relieved to hear that the SAFE Act did not apply, to seller financed vacant land transactions. But what I wanted to do in this video is take you through the actual code as written in the federal regulations and show you specifically, why in my own, non-legal opinion I do not think this applies to vacant land transactions. And remember here, I'm not an attorney so please do not take this as legal advice. I'm simply taking you through what I reviewed in Regulation G, and it's entirely possible that I missed some fine detail. So please, don't just take this as the gospel truth. I'm just taking you through my understanding and what I saw when I was going through it. And hopefully, through this, you can kind of come to your own conclusion. And just see what I mean in terms of why I don't think this applies to vacant land transactions. And also keep in mind, what I'm showing you here is the federal version of the SAFE Act a lot of states out there may have their own unique state level version of this which doesn't necessarily match exactly with what I am showing you here. So based on what state you're working in you may just wanna investigate that a little bit further just to verify that the rules, based on the state line up with the rules that we're going through here on the federal level. So, just keep that in mind. If we go right here to the Electronic Code of Federal Regulations this is the actual regulation of the SAFE Act. And the first thing we're gonna do is to go here to this first section called authority, purpose and scope. And just read up on that a little bit. And right here where it says Purpose, it says "This part implements the SAFE Act's "Federal registration requirement for "mortgage loan originators." So, without going any further I'm just gonna focus right there on that term. Where it says mortgage loan originators. So, what does that mean? In order to see how that's defined we're gonna go here to the next section, in definitions and we're gonna scroll down right here where it says "Mortgage loan originator means "An individual who takes "a residential mortgage loan application "and offer or negotiates terms "of a residential mortgage loan for compensation or gains." So, inherent in this definition here is another little term we're gonna want to look into and that is residential mortgage loan. What is a residential mortgage loan and what types of properties and loans does that apply to? Well, if we scroll down a little bit further we can see right here, residential mortgage loan means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling. As defined in section blah blah blah. We're gonna look at that in just a second. Or, residential real estate upon which is constructed or intended to be constructed a dwelling. Another key term that's baked into here is the word dwelling. So, what does the word dwelling mean? As defined in, this random code here. Well, let's look that up. If we go over here to Cornell University's website they've got just a huge database with all of this stuff and they have this exact definition right here that is being referred to. And we can see it right here. The term dwelling means a residential structure or mobile home which contains one to four family housing units or individual units of condominiums or cooperatives. So right there, I think it's fairly reasonable to conclude that that does not include vacant land. So whenever we see the word dwelling vacant land is excluded from that. Or at least, that is my understanding as I read that. Now, one important thing to point out here is that in this definition, it specifically says "residential real estate upon which is constructed "or intended to be constructed "a dwelling." So, if you were to sell a piece of vacant land with seller financing and then the next day, somebody built a dwelling on it then arguably you did sell a property with a dwelling and that's what you have secured as your collateral and then a residential mortgage loan would apply in that case. Or at least that's how I would understand it. So, in order to protect yourself from that one thing you just may want to do when you're selling a vacant lot. If you really don't want the SAFE Act to apply to you is to just include some kind of very specific terms in your loan documents to the effect of "this buyer is not going to build anything "on this property for the life of the loan "and if they do, then they have to pay off the loan first "before they do that." That should just make it abundantly clear that as far as you could possibly know and plan for this property was going to stay as a vacant lot for the life of the loan. So that should just give you a little bit of extra protection in terms of verifying that that is a vacant parcel and it is not a residential mortgage loan with a dwelling or any of that stuff. So really, if you just follow those definitions and the terms baked into those definitions you can kind of arrive at the same conclusion I did. I think. And ultimately based on that, my understanding is that that SAFE Act does not apply to vacant land transactions with seller financing. It's just as simple as that. So, again, I'm not an attorney. And I can't speak to any specifics about whatever deal you're looking at. There can always be variations and things that can change the scope of this. But, for all intensive purposes vacant land should not be held to this standard. So, if you got any questions about that or even if you don't, you know be sure to talk to your attorney make sure that they agree with this assessment and if they do you should be, home free. In terms of the SAFE Act. Hopefully that all makes sense. Thanks for watching and I'll see you again soon.