SAFE ACT: Exemption Information

The key to securing that exemption is whether a nonprofit will be considered “bona fide” by state regulators. HUD provided a series of guidelines to help state regulators make that determination. Fuller Center organizations should be prepared to provide documentation and background materials for each of the HUD guidelines.

1. Maintains tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986.
2. Promotes affordable housing or provides homeownership education or similar services.
3. Conducts its activities in a manner that serves public or charitable purposes.
4. Receives funding and revenue and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients.
5. Compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients.
6. Provides to or identifies for the borrower residential mortgage loans with terms that are favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs.
7. Meets such other standards that the state determines appropriate Fuller Center covenant partners should have no trouble meeting any of these guidelines and being classified as a bona fide nonprofit. Please also note that this determination does not provide any exemptions from any other federal requirements such as RESPA or Truth-in-Lending, and that Covenant Partners may still be required to meet state licensing or registration requirements. Affiliates should confirm with their state decision-makers as to what requirements they must still meet in order to do business in their community. It is the duty of every Fuller Center to meet all applicable state laws and regulations.