A state law signed in late May relieves Mississippi’s Habitat for Humanity chapters of requirements that each chapter have a person certified to originate mortgages.
That provision of the state’s version of the federal Secure and Fair Enforcement Mortgage Licensing Act, or SAFE, mandated that any organization or individual originating more than five mortgages a year obtain certification, a process that requires about $2,000 in expenses and lengthy instructional study. Many of Habitat’s small all-volunteer chapters worried they could not invest the money or time to meet the SAFE Act rules. The rules could have ultimately forced affiliate chapters across the state to close, Habitat officials said.
Now they won’t have to, according to Trey Jones, executive director & COO of Mississippi Association of Habitat for Humanity.
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“We want to be part of the solution and part of being held to a higher standard,” Jones said. “But the SAFE Act could have, honestly, shut down all but three of our affiliates.”
Much to the relief of Habitat, a bill signed last week by Gov. Phil Bryant lifted the broker-certification rule for non-profit housing organizations, Jones said.
The Mississippi law before amended closely followed provisions of the SAFE Act but did not exempt non-profit organizations. The U.S. Department of Housing and Urban Development later issued a ruling that stated the federal SAFE Act would not apply to the broker-certification mandate to non-profits.
But considering the absence of any specific exemption in the state law, Habitat did not “feel safe from the SAFE Act,” Jones said.
“So we decided to look for a legislative remedy.”
That led the organization to state Sen. Gary Jackson, a French Camp Republican and Baptist minister who sponsored the state’s original SAFE Act. At Habitat’s urging, he introduced a 2012 version of the SAFE Act that exempted non-profits.
Jackson, in an interview Tuesday, said the original SAFE Act made Habitat and its 47 affiliates around the state victims of unintended consequences.
“The SAFE Act was implemented to prevent predatory lending. Of course, Habitat charges no interest so it certainly can’t be considered predatory,” said Jackson, who is chair of the Senate Business and Financial Institutions Committee, a panel known more widely as the Banking Committee.
The Jackson Habitat for Humanity affiliate complied with the original SAFE Act. But unlike its smaller counterparts around the state, it had the resources to get staff sufficiently certified, Cindy Griffin, executive director, said in an interview last year.
As the builder of 30 to 50 homes a year in the metro area, the Jackson chapter “couldn’t afford to wait for a waiver on this,” she said.
“It’s quite a process,” she said of the originator certification. “It takes two to three months to get through the training and testing process.”
Unlike a conventional real estate transaction, no funds arte transferred at a Habitat home closing. “Our families are sold the home with a promissory note” at zero interest, Griffin said.
Through his SAFE Act changes, Jackson also sought to clarify mortgage origination requirements for sellers of mobile homes and manufactured dwellings. “I think before it was 12 manufactured housing units,” he said. “What we did in this Act was instead of a set number we made it a percentage.”
|Now, sellers of manufactured housing units must obtain mortgage origination licenses if they self-finance more than 20 percent of the units they sell, according to Jackson. The 20-percent requirement does not apply unless the seller self-finances 10 or more units.
As written, the federal and state SAFE Acts apply to any structure – whether permanent or mobile – that serves as a person’s primary residence. Thus houseboats and recreational vehicles fall under the laws.
In this instance, the new Mississippi law applies the 20 same percent rule to houseboats and RVs that it does to manufactured units, Jackson said.