The Washington Report

The CFPB issued an advisory opinion and research on contract-for-deed financing arrangement. This announcement makes clear that such arrangements fall under the Truth-in-Lending (TILA) laws which require the lender to prove the borrower has the ability to repay the loan, to provide disclosures, and limits balloon or bullet payments.

Contract-for-deed or land contracts are agreements for a buyer to make regular payments on the property to the owner at the end of which time, they receive the deed.  These arrangements were rife with exploitation during the 1970s and 1980s and are still common in some communities.  They often carry high rates, quick foreclosure processes, and limit home buyers' ability to recoup maintenance or improvement expenses.

This clarification by the CFPB will also impact FinTech companies that offer to purchase a home for a borrower that the borrower then pays back or has a finite period within which to purchase the home.  It also highlights some of the murky agreements that affect some equity sharing deals, an issue the Shared Equity Working Group is currently contending with.

Today, the Biden-Harris Administration announced several actions to help increase the supply of affordable housing. Furthering on the Administration’s June announcement, which NAR supported, that awarded $85 million in grants through the Department of Housing and Urban Development’s (HUD) Pathways to Removing Obstacles (PRO) Housing program, today’s actions included an additional $100 million in grant funding to assist state and local governments with identifying and overcoming barriers to housing development.

The Administration’s fact sheet to creating more affordable housing included a number of other items, including solutions to interest rate predictability for multifamily development, streamlined processes through the Department of Transportation for loans near transit centers, and a commitment to finalizing its rule for updating Manufactured Home Construction and Safety Standards.

NAR commends the Biden-Harris administration for continuing to take important steps to address the nation’s critical housing supply shortage.

Read the full fact sheet