In 2008, on the heels of the disastrous residential mortgage collapse in the U.S., the Obama administration introduced The SAFE Act, which was designed to strike back at “evil” mortgage companies. This was followed by, in 2010, the Dodd-Frank rules, that put even further teeth into control of the mortgage industry. These two financial laws immediately threw into jeopardy the simple creation of mortgages that all property owners had been using for a hundred years or more. And now every mobile home park owner is faced with the question of what to do in light of these changes.
It’s not going away and it’s not going to be amended
When the laws first came out, everyone thought that they would just go away. There were issues with enacting the laws, and continual delays, and most park owners truly believed that they would be repealed before they even took effect. But they didn’t. The laws are enacted and are unlikely to be changed anytime soon. So you better take them seriously.
Just because it’s stupid does not mean you can ignore it
Sure, the laws are probably stupid. But that’s no defense against the fact that they exist. How many other poorly thought out laws are on the books these days? Ignorance of the law is no defense, and neither is arguing that the laws are no good.
If you can’t spend the time and money to do it right, then don’t do it at all
Any way you cut it, becoming a SAFE Act licensed mortgage provider requires time and cost that most mobile home park owners are not going to invest. And that does not even include trying to come to terms with over 1,200 pages of Dodd-Frank rules and regulations. Here’s the bottom line: if you can’t do it right, if you can’t follow every law and fill out every report, then don’t even think about pretending to be SAFE Act and Dodd-Frank compliant. That will only get you into more trouble.
Renting is safe
Renting mobile homes is not regulated under the SAFE Act or Dodd-Frank. So fall back to that position. Sure, you might prefer to sell and carry paper, but renting is the next best thing, and you can completely escape the whole mess with this simple change in your business model. The customers never even cared if they owned or rented – they only cared about the monthly amount.
Selling for cash is also safe
Sure, this may be impossible with higher-priced mobile homes, but on cheaper homes, you may be able to find buyers who can come up with the cash to buy the home day one. Another option is having the customer pay cash and obtain the credit from a regular bank. In any case, as long as you sell for cash and don’t create a note, you’re safe from the SAFE Act and Dodd-Frank.
Wait and see is a good course of action
Right now, the smart park owner is the one that plays it safe and let’s others be the risk takers and pioneers. There’s no case law yet on these new rules. Nobody knows what’s going to happen or what definitions may come up with mortgages and terms. So just stay clear of the whole mess and you don’t have to worry about it.
The SAFE Act and Dodd-Frank might be the worst laws the Obama administration ever came up with. But they are the law, and you are best served in taking them seriously and coming up with a plan to stay clear of them. Play it safe around the SAFE Act.