May 11, 2016
Today’s New York Times has a story, here, on a new initiative of the Consumer Financial Protection Bureau to regulate “Contract for Deed” and what is referred to in Ohio as a “Land Installment Contract.”
Land installment contracts are typically used by individual sellers to provide a financing vehicle for individual buyers to purchase a single family home or investment property. A typical structure would call for a higher interest rate to be charged under that seller financing than bank financing would provide — precisely because those borrowers do not qualify for bank financing.
The new CFPB has until now limited its scope of regulation to federally-insured lending institutions. How it intends to increase that scope to include corporate and individual sellers is unclear.
The article also explores other proposed CFPB regulatory initiatives such as (i) prohibiting financing institutions from requiring arbitration of disputes and (ii) new regulation of payday loans.
One thing seems assured: There will be a ramped-up stream of consumer protection regulations coming from the CFPB.