SELLER FINANCING--FEDERAL REGULATION This Presentation is provided for education, informational and group discussion purposes only.   The content provided herein is not intended to create, modify, or replace your company’s policies or procedures. Nothing in this presentation is intended to provide specific legal advice.

SELLER FINANCING--FEDERAL REGULATION TOPICS FOR DISCUSSION: TILA TREATMENT OF SELLER FINANCER AS A CREDITOR. SAFE ACT (amended through Dodd Frank) REQUIREMENTS FOR A SELLER FINANCER TO REGISTER AS AN MLO. QM CONSIDERTIONS. SERVICING CONSIDERATIONS AND SMALL SERVICER EXEMPTIONS—SECONDARY MARKET. LEGISLATION REQUIRED AS CFPB WILL NOT USE EXEMPTION AUTHORITY.

SELLER FINANCING--FEDERAL REGULATION CURATIVE LEGISLATION UNDER CONSIDERATION CSSF APPROACH—TARGETED TO NONCONTROVERSIAL STRUCTURES: FIX 1: -by striking ‘‘3 properties’’ and insert­ing ‘‘5 properties’’ FIX 2: by striking ‘‘a person, estate, or trust’’ and inserting ‘‘a person or entity (including a corporation, partnership, proprietorship, asso­ciation, cooperative, estate, or trust)’’ NOTE: CFPB says they can combine separate entity ownership structures for ability to repay requirements.

SELLER FINANCING--FEDERAL REGULATION CURATIVE LEGISLATION UNDER CONSIDERATION CSSF APPROACH: FIX 3: [relating to no front end compensation] “has received any other com­pensation related to such loan, includ­ing origination points or fees and ex­cluding interest payments.’’ FIX 4: “by adding ….new clause: ‘‘(ii) is not a high-cost mortgage.”

SELLER FINANCING--FEDERAL REGULATION CURATIVE LEGISLATION UNDER CONSIDERATION CSSF APPROACH: FIX 5: has— ‘‘(I) a fixed rate; or ‘‘(II) an adjustable rate that was not determined by a prior contractual obligation between the consumer and such a person or entity and— ‘‘(aa) is adjustable after 5 or more years (as determined by the addition of a margin to a widely available index rate) subject to reasonable annual and lifetime limitations on interest rate increases or is determined by a prior obligation that is included in or assumed by the terms of the loan; or ‘‘(bb) with respect to any part of such loan contractually required to be used to make payments on an existing mortgage loan secured by such a property, is adjustable on or after the date of a rate adjustment on such existing mortgage loan.

SELLER FINANCING--FEDERAL REGULATION CURATIVE LEGISLATION UNDER CONSIDERATION ALTERNATIVE APPROACH: SAFE ACT EXEMPTION— UP TO 24 ORIGINATIONS IN ANY 12 MONTH PERIOD BUT ONLY FOR ORIGINATORS DOING RESIDENTIAL MORTGAGE LOANS FOR PROPERTY THEY OWN. (RELATES TO TILA THRESHOLD OF 5 FOR RESIDENTIAL MORTGAGE LOANS AND 25 FOR OTHER FORMS OF CREDIT BEFORE BECOME A CREDITOR)