In order to protect both the buyer's and seller's interests, a legally binding purchase agreement should be drawn up with the assistance of an attorney and then signed by both parties.
[2] In the United States, seller financing has emerged as a way for people with poor credit a path toward home ownership following stricter regulations placed on mortgage lending following the subprime crisis of 2008.
While seller financing can provide a unique way for people with low credit scores to obtain a path to home ownership, they are considered predatory by groups such as the Center for American Progress.
[1] To combat the concern for predatory lending practices, the legislative and executive branches of the United States government passed the Dodd–Frank Wall Street Reform and Consumer Protection Act and signed it into law in 2010, which contained within this legislation, a set of rules called the Loan Originator Rules.
There is a portion of those aforementioned rules that regulates the creation of consumer mortgage loans under a seller-financed transaction that prohibits the use of predatory tactics.