Central Maine Blog

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) was passed in 2008 as part of the federal Housing and Economic Recovery Act. It required the states to set up a registration/licensing process for loan originators (registration if you are a loan originator working for a federally regulated lending institution, i.e., a bank or credit union, license for anyone else).

Maine enacted its version of the SAFE Act last year and it originally was to take effect July 31, 2010, although the effective date has been extended to January 1, 2011. There are exemptions for seller financing for the seller's principal residence and for financing provided to family members. The definition of mortgage loan originator also excludes licensed real estate brokers performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, etc. Thus owner financing of the sale of the owner’s home is exempt. And parents financing a child’s purchase are exempt. But a buyer who is fixing up and reselling homes would need to be licensed to take back financing. As would a person who sells their investment properties and takes back financing.

There used to be an exemption in Maine for a certain number of transactions per year for casual financers but the federal law changed the availability of the exemption. The purpose of the law is clearly to disallow private, unregulated financing in favor of governmentally regulated and controlled financing. An option would be to become a loan originator under state law, which requires bonding, proof of net worth, and education--not an easy process.