What is the status of the SAFE Mortgage Licensing Act and owner financing in Texas?   In 2007, Texas enacted a statutory de minimis exemption under Finance Code 156.202 for seller financed properties.   As a seller you could finance up to 5 properties in any 12-consecutive months and did not have to be licensed as a loan officer. 

In 2008, The SAFE Mortgage Licensing Act became law.  The Act requires all Mortgage Loan Originators (MLOs) to register on the Nationwide Mortgage Licensing System (NMLS), complete pre-licensure education courses, pass state & federal written tests, be fingerprinted, pass a criminal background check, authorize a credit check and take annual continuing education courses.  The Act makes no reference to a de minimis exemption for owner financed properties.   Therein lies the problem. 

In June 2010, the chief regulator over the SAFE Act in Texas, Texas Savings & Mortgage Lending Commissioner Doug Foster took a major step to allow Texas property owners to continue to seller finance up to five transactions in a 12-month period.  He delayed the implementation of the SAFE Act requirement for licensure in seller-financed transactions in Texas until August 31.    This gave everyone time to work at the federal and state level  and to analyze the regulatory and legislative changes for an effective solution.

On August 17, 2010, Commissioner Doug Foster clarified a Notice he issued on August 12, 2010, that allows the continuation of the de minimis exemption until further action is taken by the Legislature.  Click here to view the Notice.  This means that a seller can once again finance up to five properties in a 12-month period without being licensed as a MLO.   This is a huge victory for sellers who offer owner financing in Texas