I JUST this minute finished a phone call with the Alabama Banking Department. I asked them three questions:
- Does the mortgage loan originator’s license requirement apply to seller-financed transactions? Their answer: YES!
- Are there any exceptions for seller financing? Their answer: ONLY when the seller is selling his or her personal residence and holding some or all of the financing.
- Do “bonds for title” and “contracts for deed” and similar arrangements qualify as “seller financing” and require a license as a result? Their answer: YES!
They also advised me regarding some other issues that I will explore and report back to you.
They say that mortgage loan originators cannot hold a license all by themselves, they must be “sponsored” by a licensed company.
They also say that if you do six or more seller-financed transactions in a year, you are classified as a “creditor” under the Alabama Mini-Code and have responsibilities under those laws. I previously advised you about Truth in Lending requirements.
Like you, I’m not happy about any of this. But, it’s the law, and we have to learn how to deal with it. Please forward this to your friends and colleagues, and ask everyone to subscribe to this blog for updates on this issue, and suggestions regarding what you can do.