Maui Real Estate: Reestablishing Seller Financing

As a member of our Realtors Association of Maui, Government Affairs Committee, this topic hits home. Many Maui residents rely on seller financing to obtain their dream buying property here in Hawaii.

Numerous properties do not qualify for conventional or even portfolio loans. Some reasons include: they may have un-permitted features, poor conditioned structures, or be comprised of multiple parcels. Sellers in these cases would have to resort to cash buyers who expect huge discounts. Seller financing opens many doors for owners in these scenarios.

At the forefront of this legislation session were two Hawaii Life agents, Tracy Stice and Lawrence Carnicelli. Not only are they members of the GAC, they also took the time to make many trips to Oahu to meet with the Hawaii Association of Realtors for a game plan.

The Issue

In 2014 the Legislature amended Hawaii’s SAFE Act (Secure and Fair Enforcement for Mortgage) and removed the option for property owners to provide owner financing on their primary residence. This is a very real consequence to The Stice Team, seeing that we have several transactions a year with either a Purchase Money Mortgage or an Agreement of Sale. This clouded amendendment was confusing for owners and licensees alike; can we as Realtors assist owners without risking our license? A clear answer to that question was more myth than reality.

The Fix

This is where Senate Bill 756, CD1 comes to play. The bill forms an exemption for a mortgage license for seller financed mortgage loans under Hawaii’s SAFE Act, if particular conditions are fulfilled.

Conditions to be met for qualification of seller financing:

1. Seller is a person, estate, or trust that transacts three or fewer residential mortgage loans in one calendar year.

2. Seller is not a loan originator.

3. Seller has not constructed as the construction contractor for the residence on the property in the ordinary course of the seller’s business.

Recent seller financing closed by The Stice Team

Recent seller financing closed by The Stice Team

SB 756, CD 1 has been passed by the state house and senate and has been sent to the governor to either sign, veto, or to let pass into law without his signature. Before then, we are still scratching our heads.

This law is not yet passed.

Tim Stice