[WSBARP] Seller Financing / Carryback / DFI Waiver / TILA / Consumer Loan Act

[samuel at meylerlegal.com]

Wise ones,

 

I know issues around seller financing, regulation and DFI waivers have been
brought up many times over the years.  I have a feeling that this issue is
going to be coming up more and more due to current market conditions.  Here
is the scenario:

 

Developer of extremely high-end homes finds a buyer who is extremely
wealthy, has enough liquid cash to put 30% down and qualifies for a
conventional loan in an amount that is significantly more than the vast
majority of humans will ever make in their lifetime.  Buyer has various
other assets that simply are not liquid but does not have enough for the
cash reserves that the conventional lender requires.  Developer is willing
to take second position and provide a loan that is interest only for two
years, with balloon payments for 50% of the principal after year one and 50%
of the principal at maturity, coinciding with certain liquidity events in
the buyer's life that makes repayment reasonable.  Developer has never
provided a carryback before - this would be a first time waiver application.

 

Given the amounts involved, the financial position of the parties and the
sophistication of the parties, you would think that this would be no big
deal, but I am not seeing a way for Developer to qualify for a DFI waiver of
under Consumer Loan Act or an exception under § 1026.36(a)(4)
<https://www.consumerfinance.gov/rules-policy/regulations/1026/36/#a-4> .
Any ideas?

 

My other thought is that Developer can make this loan to Buyer and qualify
for a DFI waiver if they secure the loan with an assert other than the
residence being purchased.  Thoughts on this approach?

 

Sam 

 

 

 

Samuel M. Meyler

Meyler Legal, PLLC 

1700 Westlake Ave. N., Ste. 200

Seattle, Washington 98109

Tel:  206.876.7770

Fax:  206.876.7771

Email:   <mailto:samuel at meylerlegal.com> samuel at meylerlegal.com

  

NOTICE:

 

This electronic message contains information which may be Confidential or
Privileged and constitutes an electronic communication within the meaning of
the Electronic Communications Privacy Act 18 USC 2510. The information is
intended to be for the use of the individual or entity named above.  If you
are not the intended recipient, please be aware that any disclosure,
copying, distribution or use of the contents of this information is
prohibited.  If you received this transmission in error, please notify the
sender and delete the copy you received together with any attachments.
Thank you.

 

-------------- next part --------------
A non-text attachment was scrubbed...
Name: winmail.dat
Type: application/ms-tnef
Size: 6430 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20231027/9fd5b577/winmail.dat>