HUD Messes With Seller Financing

So, now HUD is proposing legislation that eliminates all seller financing unless it’s on the seller’s primary residence or s/he is a licensed mortgage originator.


As you know, I love seller financing. I have used it extensively to buy and sell residential and commercial investment properties. So, announcements like this really get me steamed. Once again, the government trying to interfere with and put limits on the way I run my real estate business.

You can download the full proposal here:

Yes, it’s an issue for investors selling properties and offering owner financing. But, after reading the proposal, I think you can get around it by:

1) Becoming a licensed mortgage broker.
2) Working with a licensed mortgage broker on your deal.
3) Having an attorney represent the buyer.

If none of those options sound appealing, then sell those residential properties using FHA financing which no longer requires any seller seasoning and start investing in commercial property.

I’ve been a commercial investor exclusively for several years now and I have to tell you, it’s much easier over here. NONE of these HUD rules apply to commercial transactions. None of the other ridiculous regulations apply, either.

Commercial property transactions are business transaction between two businesses. There’s no poor, illiterate, innocent citizen that the government needs to protect from us predatory, manipulative real estate investors. I love commercial investing.

In fact, last week I did a private, VIP webinar to give a sneak peek of my new course, Master Lease Option Method, and one of the slides was entitled “Why Commercial?” Here are the reasons why I love commercial investing so much:

* Residential profits are limited.
* Residential is too regulated.
* Residential has occupancy issues.
* Residential is for the “do-it-yourselfer” and I do not want to do it myself.
* Commercial offers exponentially increased profits, opportunities, creativity and PROFESSIONALISM.

So, for now you have a couple of choices. 1) Remain a residential investor and deal with the ever-changing, and increasingly stifling rules OR 2) come on over to commercial. I’ll show you how.

If you haven’t checked it out yet, head over to: and sign up to get access to 4 free training videos. The Top 5 Ways to Get Seller Leads Fast and Free video is pretty popular. It has over 100 comments already. :-)


  1. Susan:

    Have you made a purchase offer on an REO property with seller financing? and why not?
    and if so, what to do differently to have them accept it?

    • That’s seller financing from the bank since it’s bank owned. I personally only make offers on multifamily, no residential, so no I have not done a residential REO deal with seller financing. I’ve done many that were not REO’s.

  2. Reference the question about seller financing on REO property. I’m looking at an 8-plex REO. Is it worth approaching the bank/seller re financing? Property needs some work. Only 2 units rented and they are rented for under market value. Was told I’d have to get new financing.

    • Mark – if the bank told you to bring new financing that means they don’t want to loan on this. I imagine if it were cash flowing and did not need improvements it would be a different story. Try a portfolio lender, hard money or debt/equity investors.

  3. I am currently awaiting a response from a lender on a commercial REO property that has -$5200 cash flow per month. It’s an alligator and it needs another $350K of repairs. My offer includes seller financing for the acquisition AND the rehab costs (as a cash credit to buyer at closing). 12 month term, and I’ll refinance after repositioning and stabilization to pay off the lender. My offer stops the bleeding, puts more of their money to work (I offered 5% simple interest), moves that property from the liability column over to the asset column.

    When the lender owns the property, they are automatically the primary portfolio lender for that property. Of course, I could pay cash for the whole deal at that price, but I always try to get cost effective financing before considering writing the check.

  4. I just bought a HUD that had 100 percent financing, plus made 900 cash on the purchase, however its required that I move in.. which I’m fine with, however I’d like to refinance it out of HUD and I’ll eagerly toss a renter in there. my question is
    1. Is it possible when I refi to refi it out of a HUD? I’m in the process of refinancing my property in TX and it seems they refinance it into whatever it was.

    • Not sure what you mean by “refinance it out of a HUD.” HUD financing is FHA. FHA financing is for owner occupants only so you better call the movers or you just committed loan fraud.

  5. Hey Susan

    I just graduated from college in December and am looking to buy a foreclosure (home or duplex) in the next two years down here in Atlanta. Do you have any tips on this process or what I should look for in a house?


  6. Hi Susan,

    I have not heard if the HUD restriction on residential owner financing is a done deal yet. Do you know for sure?


    • Not a done deal yet….

  7. Susan,

    I’ve become your student just recently and I am already learning so much from you. What stands out is your integrity and expertise. You don’t charge for every word you say. I am so greatful for your presence in our life. Thank you for your work.
    Marina L

    • Thank you Marina. :-)



  1. Dealing With The New HUD Guidelines | REI News Watch - [...] Dealing With The New HUD Guidelines [...]

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