HR6511-119

What This Bill Does

The Affordable Homeownership Access Act expands exemptions for small-scale owner financing. The findings describe owner financing as a transaction where a property owner finances the buyer, the buyer makes a down payment, receives deed or title, and makes installment payments over time, often when underserved borrowers cannot or prefer not to use bank financing. The bill says the amendments do not apply to unrecorded contracts for deed or land installment contracts, lease options, lease with option to buy, or rent-to-own transactions. Section 3 exempts non-depository owner financers from SAFE Act loan originator licensing or registration requirements if they extend credit for no more than 24 residential mortgage loans in a 12-month period and only for property they own. Section 4 rewrites the Truth in Lending Act mortgage-originator definition so certain persons or entities providing owner financing for the sale of up to 24 properties are not mortgage originators if each property is owned by the seller, secures the loan, was not newly constructed by the seller as a general contractor in the ordinary course of business, is fully amortizing, uses a documented good-faith ability-to-pay determination, has a fixed rate or adjustable rate that adjusts only after at least five years with reasonable annual and lifetime limits, and meets CFPB criteria. It adds a similar exclusion for owner-financed consumer loans secured by manufactured homes, excluding loans made by the home manufacturer and requiring the same amortization, ability-to-pay, rate, and CFPB conditions. Section 5 requires HUD and Treasury to study owner-financed purchases of homes bought for under $150,000 or 60 percent of local median home value, the number financed by licensed mortgage brokers, homes that could be sold but are not because sellers cannot comply with broker rules, and potential effects on home values and wealth creation. A report to House Financial Services and Senate Banking is due within one year, with transaction data from 20, 15, 10, and 5 years before enactment.

Who Benefits and How

Homeowners selling low-cost properties benefit because they can offer seller financing on up to 24 owned homes per year without triggering SAFE Act licensing. Borrowers using owner financing benefit if more low-cost homes and manufactured homes become available outside traditional bank underwriting. Manufactured home borrowers benefit from a parallel exclusion tied to fully amortizing loans, ability-to-pay documentation, and rate-adjustment limits. Real estate sellers and small lenders benefit from clearer federal exemptions. Congressional housing committees benefit from a HUD-Treasury report on owner-financed transactions and possible wealth-creation effects.

Who Bears the Burden and How

State mortgage licensing regulators and CFPB mortgage regulators have less direct coverage over qualifying small owner financers and must account for federal exemptions. Owner financers must keep within the 24-loan cap, finance only owned property, document ability to pay, use fully amortizing loans, follow rate-adjustment limits, and avoid excluded transaction types. HUD housing analysts and Treasury housing finance analysts must complete the study and report within one year. Borrowers using owner financing may face more seller-financed offers outside traditional mortgage-originator channels, so the statutory loan conditions matter more.

Key Provisions

• Exempts non-depository owner financers from SAFE Act licensing when they make no more than 24 residential mortgage loans per year on property they own.
• Excludes qualifying owner financers from the Truth in Lending Act mortgage-originator definition for up to 24 owner-financed property sales.
• Requires qualifying loans to be fully amortizing, supported by documented ability to pay, and fixed-rate or adjustable only after at least five years with reasonable limits.
• Creates a similar owner-financing exclusion for manufactured home loans when the seller owns the home and is not the manufacturer.
• Excludes unrecorded contracts for deed, lease options, lease with option to buy, and rent-to-own transactions from the amendments.
• Requires HUD and Treasury to report within one year on low-cost owner-financed home purchases and potential effects on home values and wealth creation.