Only "Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered.All other mortgage loan originators are licensed by the states."

The states do not license individuals writing owner financing at this point, and they are not likely to require such licensing since the person is not 'engaged in the business.'

Just because you do something once (or even twice) does not mean you are 'in business,' a usual requirement for licensing.

We will have to wait for the regulations to be issued and see EXACTLY how they are worded.

Regulations are also subject to a public comment period, though without an organized group making a significant number of comments input is often ignored.

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All other mortgage loan originators, without exception, must be state licensed.
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How does the code (law) define "mortgage loan originators"?

This is the same thing the regulators that will do, so waiting for the regulations to be issued to find what view they plan on taking is likely the best option.

If all the references about the bill are to commercial activity (loan brokers, commercial lenders, etc.) then a seller offering financing is unlikely to fall into the groups.

"individual who for compensation or gain or in the expectation of compensation or gain"

This is the phrase that is VERY likely to make the law NOT apply to seller financing.

Offering seller financing is NOT for "compensation."

You would receive nothing outside of the stated loan payments.

This law has already *officially* made seller financing illegal in WA state*, though so far the state has opted to leave it unenforced (kind of like our nation's immigration laws anymore.)

(*According to the WA State Department of Financial Institutions' response to a private inquiry from a real estate investor I know who wants to sell via carrying his own paper.)

Business is officially a "state enemy" all the way down to the littlest of little guys now. Housing is going a whole lot of nowhere until this trend reverses.

Cheers,
Dave Donhoff
Leverage Planner

From the model law, clearly stated:

(3) EXEMPTION FROM THIS ACT—The following are exempt from this Act:

(a) Registered Mortgage Loan Originators, when acting for an entity described in MSL XX.XXX.030(10)(a)(i),(ii) or (iii) are exempt from this Act.
(b) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
(c) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence.
(d) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator.

Underlining added.

So the first line "Seller finances mortgages are not covered." is not true in every circumstance.

Any individual who buys a house for the purpose of resale is in the game as a business and would not be exempt in any case.

The statement All other mortgage loan originators, without exception, must be state licensed. is incorrect. The model law sees sellers who offer financing as loan originators, but then exempts most of them from its provisions. In other words, though they may technically be loan originators in the legal sense, the are not required to be licensed.

Bottom line: Assuming a state adopts the model law, seller financing will not be affected in most cases.

Rental owners and flippers, if they still exist, will be affected, although it wouldn't surprise me to see most states also exempt the rental owners.

"individual who for compensation or gain or in the expectation of compensation or gain" is referring to the loan origination process, not the underlying sale of the property.

Unless you charge a 'loan origination fee' you are not profiting from the loan making process itself like a bank does, the folks the law is aimed at.

"Don't see how you can construe teh act of securing a sale NOT a "gain" for a seller (even if they are selling at no profit... ceasing their current obligations in itself is a gain.)"

That is an IRS only viewpoint, and specific to taxes and income.
If "securing a sale" is covered all sales are regulated, and that is obviously NOT the intent of the law.

"*According to the WA State Department of Financial Institutions' response to a private inquiry from a real estate investor I know who wants to sell via carrying his own paper."

Relying on the governments attorneys for a legal opinion has no standing in court.
It is the same as an Attorney General issuing an opinion.
It is not binding, and cannot be used as a defense in court.

If you want advice that is useful pay your attorney.

Government likes regulation.