Proposed Bill Exempts Owner-Financers from Licensing for Up to 24 Home Sales Annually

The Affordable Homeownership Access Act is designed to open up more pathways to buying a home, especially for those who can’t get a standard bank loan. Essentially, this bill carves out a major exception in federal lending rules for property owners who decide to sell a home and finance the purchase themselves—what’s known as owner financing. Under this proposal, an owner-seller can offer up to 24 residential mortgage loans in any 12-month period without having to comply with the federal licensing and registration requirements of the S.A.F.E. Mortgage Licensing Act (SEC. 3). The property must be one they already own, not one they built specifically for sale.

The 24-Property Rule: Less Red Tape for Sellers

Right now, if you’re lending money for a mortgage, you usually have to be a licensed mortgage originator. This bill changes that for small-scale owner-financiers. By creating an exception in both the S.A.F.E. Act requirements and the definition of a “mortgage originator” under the Truth in Lending Act (SEC. 3, SEC. 4), the bill is essentially saying that if you’re selling and financing fewer than two dozen properties a year, you don’t need to jump through the same regulatory hoops as a bank or a professional mortgage broker. The idea is to make it easier for small business owners and individuals to sell properties, particularly lower-priced homes, to buyers who might be underserved by traditional lenders. For example, a small landlord looking to sell off a few rental properties could now offer financing to tenants or other buyers without needing to become a licensed lender.

Minimum Guardrails: What Owner Loans Must Look Like

While the bill removes the licensing requirement, it does set some basic requirements for these exempted owner-financed loans, which is important for consumer protection. The loan must be fully amortizing, meaning the payments cover both interest and principal so the loan is completely paid off by the end of the term—no balloon payments that surprise the buyer later. The interest rate must be fixed or adjustable, but if it’s adjustable, it can’t change for at least five years and must have reasonable caps on how much it can increase (SEC. 4). Crucially, the owner-seller must also determine in “good faith” and document that the buyer has a “reasonable ability to repay” the loan. This is the bill’s attempt to prevent owners from setting up buyers for failure, similar to what banks must do, but the “good faith” standard is less rigorous than the objective metrics banks usually rely on.

The Trade-Off: Access vs. Oversight

This bill presents a classic policy trade-off. On one hand, the findings section argues that owner financing can boost home values and help with wealth creation, especially for underserved buyers. By relaxing the rules, the bill could increase the supply of homes available for purchase via owner financing, which is a win for people struggling to qualify for traditional mortgages. On the other hand, removing the licensing requirement means that the person originating the loan—the owner-seller—won’t have the same regulatory oversight or required training as a licensed professional. If that owner-seller’s “good faith” assessment of ability to repay is weak, or if they cut corners, the buyer is exposed to higher risk. This is the core concern: while the bill is trying to help buyers by increasing access, it’s doing so by lowering the regulatory safety net.

What the Bill Doesn’t Touch (and Why It Matters)

It’s worth noting what the bill explicitly doesn’t apply to: Contracts for Deed, Land Installment Contracts that aren’t recorded, Lease Options, and Rent-to-Own agreements (SEC. 2). These unrecorded or conditional sales contracts are notorious for leaving buyers vulnerable—they often pay for years but don’t build equity and can be easily evicted if they miss a payment. By excluding these riskier contract types from the exception, the bill focuses its regulatory relief only on transactions where the buyer receives the deed upfront and the transaction is recorded as a mortgage.

Finally, the bill mandates a joint study by the Department of Housing and Urban Development (HUD) and the Treasury Department (SEC. 5). They have one year to report back to Congress on how many lower-priced homes (under $150,000 or 60% of the median home value) are being sold through owner financing, and how existing regulations might be preventing more such sales. This study suggests the government is trying to figure out the true scope of this market and how much impact regulatory relief might actually have on housing affordability.