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Lenders That Don’t Require Title Seasoning

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Lenders That Don’t Require Title Seasoning

This topic contains 22 replies, has 0 voices, and was last updated by Avatar of socalgal socalgal 10 years, 10 months ago.

Viewing 15 posts - 1 through 15 (of 24 total)
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  • #5377
    Avatar of socalgal
    socalgal
    Participant

    I’ll add to this list as I come across them–(painstaking research for which I don’t expect compensation). :-)

    Ronald Branch
    Lending in IL, IN and WI
    Seaway Bank and Trust Company
    773 602-4116 direct

    #28112
    Avatar of areyes
    areyes
    Member

    Can you post a list of lenders that will work with lease option refinancing or contract for deed refinancing or wrap around refinancing? This would be more in-line with lenders agreeing to work with RB’s that have a vested interest in personal property.

    #28113
    Avatar of socalgal
    socalgal
    Participant

    Investment or Second Home
    Residential (1-4 & Condos)
    NY, NJ, CT, HI, CO, WA: max 60-70% LTV
    NV, FL, CA, OR: max 50% LTV

    60% LTV up to 1M current appraised value
    70% over 1M current appraised value
    Full doc only; self employed can use company income
    Investment property income OK. No 4506
    Rate based on 3-month Libor + 2.59% margin
    Current Rate = 3.7%
    Interest only + 0.2%. Under Corporation or LLC +0.25%
    Term up to 30 Years
    No FICO credit score requirements
    No limits on loan amount
    Minimum loan amount = $150K
    No Seasoning on Title
    No limit on number of investment properties
    Non-warrantable condos OK
    No price adjustments for Jumbo or Cash Out
    Corporation or LLC OK

    Bank Fee: 1% of the Loan Amount
    Processing Fee: 0.3% (For Corp or LLC + 0.25%)
    Fees paid at clear to close

    Dmitry Gordon
    Amerimax Capital, LLC RMB # 206581
    75 Maiden Lane, Suite 904/224
    New York, NY 10038
    Ph: 212.803.7260 ext.1000
    Fax: 212.803.7261
    Mob: 917.826.9732
    dgordon@amerimaxcapital.com
    http://www.amerimaxcapital.com

    #28114
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @areyes wrote:

    Can you post a list of lenders that will work with lease option refinancing or contract for deed refinancing or wrap around refinancing? This would be more in-line with lenders agreeing to work with RB’s that have a vested interest in personal property.

    A year ago I would say almost all lenders would have some sort of Lease Option Refi type program. Today I’m sure there are fewer of them but they still do exist. But remember, it is really a “New Purchase Loan” that the lender treats like a refi.

    #28115
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @SoCalGal wrote:

    Despite Dave’s insistence that no obligation for information sharing exists among the principals of NARS or its affiliates, I shall do my best to bring tools for success by posting the names of lenders and/or title companies that ostensibly won’t put roadblocks in your path such as title seasoning.

    If you intend to see a profit before 12 months, title seasoning is a huge obstacle at this time. It behooves the real estate investor to know who the flexible lenders are so that you can direct your end buyer to them.

    No charge. :-)

    First, I’m not speaking for NARS but since I am now a licensed “affiliate” I can speak for myself.

    It’s not a matter of obligation on their part, it is not their function nor do they even know who these lenders are. They are not Brokers or Lenders and are in the business of processing EHTrust documentation. Even if they knew who some of these lenders were it would possibly create liability on their part if they recommended or posted a list of lenders, especially if something went wrong with a lender. NARS keeps the Main Thing the Main Thing and lets its “independent” members find other services they or their client may need on their own.

    As for me, I am a licensed loan officer but haven’t taken a loan app in years. Why? Because I refer all my buyers to another licensed loan officer who knows what they are doing, are familiar with our program and has no connection to me, NARS or the transaction. In other words, I don’t know or care who the lender is.

    #28116
    Avatar of socalgal
    socalgal
    Participant

    But remember, it is really a “New Purchase Loan” that the lender treats like a refi.

    No, this just isn’t true. Lenders are hip to this. They know that trusts are created to avoid seller title seasoning. Therefore, most lenders won’t lend to trusts. All lenders, without exception, require a 24 month chain of title to determine the beginning and end points of trusts. If it appears that circumvention of seller title seasoning is being attempted, they will request a copy of the trust to see what’s going on.

    More often than not, they will simply require that the buyer come out of the trust, borrow as an individual (“natural person”) and then, if he wants to, he can resume the trust. If the time period is less than 12 months, the new LTV will be based on current appraised value or purchase price, whichever is less.

    Borrowers who utilize inter vivos trusts for estate planning purposes complain about this all the time. They don’t want to disrupt the trust–which many times they just paid a fee to create–and pay $100 to record a Grant Deed. But he who has the gold makes the rules. Most lenders’ rules are:

    2.9. Title Vesting Requirements

    PBM requires that vesting on title matches the 1003 and face of the Mortgage exactly. Non-borrowers are not permitted to be vested on title, except in those states where a non-borrowing spouse is permitted to sign the Mortgage, TIL, Itemization of Amount Financed, Notice of Right to Cancel, Document Correction Compliance Agreement and Flood Hazard Notice.

    PBM does not permit Borrowers to take title in the name of a trust. All Borrowers must take title as individuals. If the property is currently vested in a trust, the Borrowers must Grant Deed from the trust to him/herself as an individual.

    #28117
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    Whats sad here is that you are right but for the wrong reasons. A lender does not lend “to a trust”, they lend to a “natural person” who also happens to be a beneficiary of the trust, not on title to the property. Being a beneficiary of a valid and propterly drafted “Land Trust” is not the same as being on title to the property.

    The reason people experience what you are referring to when doing “Estate Planning” is because they are using a Family type Revocable Living Trust in which “The Trust” becomes the owner of the property, not the Trustee and which the beneficiaries do not have an arms length relationship with the trustee. Typically one of the beneficiaries is the trustee. This is not the case with an Illinois Type Title Holding Land Trust, particularly the NARS EHTrust. And yes, it makes all the difference in the world.

    #28118
    Avatar of socalgal
    socalgal
    Participant

    No reason to be sad (and condescending) here, Scott. As indicated by the back emails I’m getting, I’m not the only one with this question. There are not very many direct and clear answers provided on this board. I hope this spate of threads gives us the opportunity to explore one singular and important obstacle to flipper profits: seller’s title seasoning absent full documentation supporting new higher value.

    This is not the case with an Illinois Type Title Holding Land Trust, particularly the NARS EHTrust. And yes, it makes all the difference in the world.

    “…all the difference in the world” is the reason I plunked down six grand to become a NARS member. But, after spending $2,000 more on marketing, I have determined that a NARS Trust makes absolutely NO difference–for two reasons:

    1. Lenders require my (flipper/investor) presence on title for at least 12 months (conforming) or 90 days (FHA) in order for new (higher) value to be used for calculating loan-to-value on the new loan.

    2. Lenders will not lend to a trust such that the end buyer’s connection to the trust in any way satisfies seller title seasoning.

    If, however, you think there are some lenders/title insurers who co-exist comfortably with a NARS Trust so as to satisfy seasoning requirements, I’d like to know who they are so I can validate, through such lenders’ underwriting guidelines, and thus overcome this very real obstacle to flipper profits.

    #28119
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @SoCalGal wrote:

    No reason to be sad (and condescending) here, Scott. As indicated by the back emails I’m getting, I’m not the only one with this question. There are not very many direct and clear answers provided on this board. I hope this spate of threads gives us the opportunity to explore one singular and important obstacle to flipper profits: seller’s title seasoning absent full documentation supporting new higher value.

    This is not the case with an Illinois Type Title Holding Land Trust, particularly the NARS EHTrust. And yes, it makes all the difference in the world.

    “…all the difference in the world” is the reason I plunked down six grand to become a NARS member. But, after spending $2,000 more on marketing, I have determined that a NARS Trust makes absolutely NO difference–for two reasons:

    1. Lenders require my (flipper/investor) presence on title for at least 12 months (conforming) or 90 days (FHA) in order for new (higher) value to be used for calculating loan-to-value on the new loan.

    2. Lenders will not lend to a trust such that the end buyer’s connection to the trust in any way satisfies seller title seasoning.

    If, however, you think there are some lenders/title insurers who co-exist comfortably with a NARS Trust so as to satisfy seasoning requirements, I’d like to know who they are so I can validate, through such lenders’ underwriting guidelines, and thus overcome this very real obstacle to flipper profits.

    I appoligize, I don’t mean to or intend to be condescending.

    I agree, we are moving toward a better understanding of where each of us is coming from. I’m sorry you don’t feel that I give clear and complete answers but I think I am. I still believe you may have missed some very important aspects of the EHTrust and so I’ll continue to be patient and do the best I can to answer your concerns and anyone elses.

    Regarding point #1 of this post… remember, we are not “Flipping”. There is only one sale and one close.

    Go with me for a minute on this one. The property is simply sold by its owner to the buyer. It doesn’t matter if it is the Trustee, again since it is not considered a chain of title issue or seasoning issue with a valid land trust. I do agree with you. There may be, and most often is, a lack of education and understanding on the nuances of valid trusts let alone an EHTrust. And again, my experience in closing many transactions has not been as you have outlined.

    Rgarding point #2, again, no one is lending “to a trust” only to an individual who may or may not be a beneficiary of that trust. And once again, I have never been asked by any lender to remove a beneficiary from the trust just because they are also the buyer.

    Believe me, I’m trying very hard to come to some agreed upon common ground and have you feel proud to be a Professional NARS Network Member.

    #28120
    Avatar of socalgal
    socalgal
    Participant

    Believe me, I’m trying very hard to come to some agreed upon common ground and have you feel proud to be a Professional NARS Network Member.

    Well, thank you. I don’t mean to be confrontational but only to get my basic questions answered.

    Let’s not call the transaction a “sale” but a reconveyance; that is, an event that gets recorded so that, when a lender requests a 24 month chain of title–which they all do–the recordation of a trust will be reflected on title.

    Let’s use an example transaction (which I posted in another thread, too).

    I locate a homeowner willing to remain on his 7% existing note, which balance is $300,000. “As is” value is $320,000 but, with paint and carpet that I supply, the home’s value will be $360,000. If homeowner attempts to sell as is in the usual manner, the friction of selling costs will result in him having to bring money to the closing table. Thus, he agrees to stay on the note.

    I find a person with 5% down who’s willing to pay, after renovation, $360,000 for the property.

    End buyer becomes the Resident Beneficiary and I become the Investor Beneficiary who stands to make $60,000 when I flip this property to the RB. Seller Beneficiary expects to receive nothing when the trust is terminated.

    One month later, rates are darn good (4.5%) and RB desires to obtain his own loan. I’ve completed renovations, so I say OK. RB has accumulated a down payment, but it hasn’t been in his bank account for three months, so we have a down payment seasoning challenge, too.

    The RB’s loan-to-value would be calculated on current appraised value or purchase price, whichever is lower EXCEPT THAT I’ve owned the property for only one month and my cost basis is $300,000. This is known as “seller title seasoning.”

    The only way I can realize my profit is if the lender recognizes the purchase price of $360,000 but since I haven’t owned the property for 12 months (conforming) or 90 days (FHA), how are we going to use new value when only $10,000 was spent on the property?

    How does the NARS Trust facilitate the application of current appraised value ($360,000) with respect to the RB’s new loan?

    How does the NARS Trust overcome the lack of seasoning of the RB’s down payment?

    #28121
    Avatar of joecain
    joecain
    Member

    @SoCalGal wrote:

    Let’s use an example transaction (which I posted in another thread, too).

    I locate a homeowner willing to remain on his 7% existing note, which balance is $300,000. “As is” value is $320,000 but, with paint and carpet that I supply, the home’s value will be $360,000. If homeowner attempts to sell as is in the usual manner, the friction of selling costs will result in him having to bring money to the closing table. Thus, he agrees to stay on the note.

    I find a person with 5% down who’s willing to pay, after renovation, $360,000 for the property.

    End buyer becomes the Resident Beneficiary and I become the Investor Beneficiary who stands to make $60,000 when I flip this property to the RB. Seller Beneficiary expects to receive nothing when the trust is terminated.

    One month later, rates are darn good (4.5%) and RB desires to obtain his own loan. I’ve completed renovations, so I say OK. RB has accumulated a down payment, but it hasn’t been in his bank account for three months, so we have a down payment seasoning challenge, too.

    The RB’s loan-to-value would be calculated on current appraised value or purchase price, whichever is lower EXCEPT THAT I’ve owned the property for only one month and my cost basis is $300,000. This is known as “seller title seasoning.”

    Awesome.
    A concrete example.
    Everybody following along?

    Here we go SoCalGal:

    There are lots of things that you got right in this example. However, there is one glaring example of one you got wrong:

    Here is your quote:
    ” . . . EXCEPT THAT I’ve owned the property for only one month . . . “

    NOW, TAKE A CHILL PILL FOR A MOMENT AND JUST READ:

    YOU DO NOT OWN THE PROPERTY. YOU ARE NOT ON TITLE.

    The basis for most of your objections so far, spread over in excess of 100 posts in the last week ( :shock: ), regards lending to a Trust and the seasoning of title for the end buyer.

    The original owner stays on the loan and merely transfers title to the Trustee of their very own Illinois-type, inter-vivos Settlor Trust where the original owner retains 100% of the beneficial interest. It is their Trust. No new funding and they are still responsible to pay their lender. Legal and equitable title may be vested with the Trustee, but make no mistake, this is the Settlor’s Trust.

    If the Settlor so chooses, and subsequent to forming their Trust, they may assign some percentage of the beneficial interest in their Trust to other parties, maybe even to you and/or others, including a party who may choose to reside in the property and lease the property from the owner of the property.

    This Assignment of Beneficial Interest in the Trust is PRIVATE and not recorded. Thus, any title search shows only the current owner of the property, the Trustee, and any former owner of the property, including the Settlor who formed their own Trust.

    Still with me everybody??

    SoCalGal, you as the Investor Beneficiary, do not own the property. You are not on title or in the chain of title. Please. I need you to fully “get” this point. The Corporation, as Trustee for the Settlor’s Trust, owns the property. Not you. Period!

    The party residing in the property, the Resident Beneficiary, does not own the property either. They are not on title or in the chain of title. Please. I need you to fully “get” this point, as well. The Corporation, as Trustee for the Settlor’s Trust, owns the property. Not the Resident Beneficiary. Period!

    At some point, one day later, one week later, one month later, one year later, ten years later, a party wishes to purchase the property being held in the Trust. For the purposes of your example, let’s agree to keep this discussion to less than your requested limit of 12 months.

    A buyer is located who wishes to purchase the property. In many cases, this buyer is the very same natural person or individual who was residing in the property and leasing it from the owner. An Offer is generated from buyer to owner (as seller), who passes it on to the beneficiaries of the Trust for review and possible approval. The NARS Beneficiary Agreement (one of the private Documents involved in the Settlor’s Trust) lists the entire process step-by-step. (As a NARS Network Member, you possess an example of this Doc and all the others that we use, and I encourage you to consider the possibility being educated and going back to the Docs and reading and studying.)

    If the Purchase Offer is accepted by the beneficiaries of the Trust, then they sign, in concert, a Letter of Direction instructing the Trustee to terminate the subject Trust, and of course, since this is a beneficiary-directed Trust, the Trustee will do exactly as instructed.

    Ready everybody, here comes another vital point:

    Once the Trust is terminated, there are no longer ANY beneficiaries in reality.

    Since removing a beneficiary from the Trust before allowing them to purchase the property came up in another of your strings of posts, I felt the importance of distinguishing this fact:

    NO TRUST = NO BENEFICIARIES !!

    So, where are we and what do we have left, in reality?

    We have a property.
    Owned by a Corporation.
    Being purchased by an individual.

    That’s it folks. Nothing more or less.

    A new Title Transfer Deed is generated, transferring title from the Trustee of the now-terminated Land trust to the buyer at the Close of Escrow of the traditional real estate transaction. Of course, all of this assumes that the buyer has secured funding, in their own name as a natural person as you have generously informed us repeatedly, sufficient to purchase the property. I will even guess that you, in your capacity, may even be able to assist the individual wishing to purchase the property in securing lender financing.

    Let me be really clear on one other point:

    The Trust is not selling the property.

    In fact, once the Trust is terminated at the mutual direction of the beneficiaries, there is no longer a Trust. An individual is purchasing a piece of real property from a Corporation, and that’s all.

    I appreciate your frustration and I am of the belief that, should you choose to do so, a thorough reading and understanding of this response can go a long way toward relieving much of that frustration. As I have stated previously, you are obviously an expert in your end of the industry and I acknowledge your willingness to share your expertise with us. I view your insistence that we must be generating transactions that do not conform to the rules, regulations and guidelines that you have spent a career studying and understanding as a simple mis-communication and a bit of ignorance (as in, not knowing what you do not know).

    Bill Gatten, the architect of all you read and see here at NARS and The Bill Gatten Center has also spent a career studying, researching and understanding all the laws pertaining to what we do here.

    I do not request that you believe me or Scott or any other lurker or poster on an internet website Discussion Board.

    I do ask however that you have trust in the concept that Bill has done a near-lifetime worth of homework for you, and the rest of you reading this post, NARS Network Members and non-members alike. I ask that you have trust that these transaction are being generated and completed in most every area of the United States.

    I also ask that you consider the possibility of being patient.
    Take the rest of the day off and away from this conversation.
    Come back to it tomorrow or over the weekend and re-read many of the responses to your questions.
    Consider being the student and not the teacher on this particular subject.
    Consider the possibility that some pieces of this transaction and this conversation are outside your normal areas of expertise.
    Consider taking a French Class in order to learn French, as another poster put it in another post, and stop calling the language we are speaking “Gobbledygook” just because you have not yet learned the rules of the use of that language or how to be fluent.

    I am encouraged by the level of civility and intelligence in this conversation by all the parties who have taken their time to read and type all this prose over the last week. Thank you all for being generous. But, as yet another poster typed earlier today, ” . . . Folks, KEEP YOUR EYES ON THE PRIZE. Stick with the basics. Don’t get hung up on what you fail to see and recognize the beauty of what you can see. Don’t get distracted. Don’t divert your attention from the task at hand. Keep it simple. Keep working the plan. As Walt Disney stated, keep moving forward. Spend more time pressing the keys of your phone and less time pressing the keys of your laptop . . . “

    It’s time to get back to our primary purpose:

    MAKE OFFERS !
    MAKE OFFERS !!
    MAKE OFFERS !!!

    #28122
    Avatar of tmynar
    tmynar
    Participant

    Thank you Joe Cain and Scott Moyes !
    Thomas Mynar

    #28123
    Avatar of jerry carey
    jerry carey
    Member

    Hello All:

    Sorry to jump in so late on this post and topic, but been a a bit of a hiatus for a couple of months.

    I have some questions regarding Mr. Joe Cain’s posting statements!

    He said quote:

    Once the Trust is terminated, there are no longer ANY beneficiaries in reality. … NO TRUST = NO BENEFICIARIES !!
    So, where are we and what do we have left, in reality?
    We have a property.
    Owned by a Corporation.
    Being purchased by an individual.

    I’m assuming that when the trust is created that EHC takes title on a Trustee’s Deed … recorded as “EHC as Trustee of the XYZ Trust, DATED:XX/XX/O9. If this assumption is correct … when the trust is terminated (as you described above) for sale to any End-Buyer … is a new deed recorded to EHC as a Corporate entity or is the earlier recorded Trustee’s deed left in place for sale to said End-Buyer?

    I don’t think it really makes any difference in terms of “Seller Seasoning Requirement” of End-Buyer lenders! “Seller Seasoning Requirement” is not limited to just Trusts but rather to any seller regardless of how title is recorded and ownership is being held!

    The “Seller Seasoning Requirement” was established by lenders to stop Investors from using “Straw Buyers” to fraudulently raise the lender used appraisal and loan value!

    I don’t see how terminating the SHORT TERM Trust (created less than 12 month ago) or newly recorded EHC coporate deed will satify the End-Buyer’s lender’s requirements!

    This string topic about overcoming lender’s “Seasoning Requirement Issues” in any transaction … not exclusively from the sale of properties being held in Trust or recently terminated Trusts!

    Could you (Joe) or anyone else please clarify this point for me!

    Jerry Carey

    #28124
    Avatar of piloto
    piloto
    Member

    Jerry,

    -The Trustee in NY, we are a mortgage State, takes title on a ‘Bargain and Sale Deed’ as Equity Holdings Corp, a California non-profit corporation, as Trustee for the ‘Named trust’. This same title is then sold to the end buyer (the sales contract is between the END BUYER and Equity Holdings Corp, the owner of record), using the moneys from the end buyers loan (which they applied for and obtained as an individual) and possibly moneys the end buyer will receive from their beneficial interest in the trust (allowed as a down because it is the sale of, or converting to cash of personal property). Only one sale has taken place, that to the END BUYER.

    -You are correct, Trust or no trust the lenders seasoning requirements remain the same. The Seasoning issue has to do with the last time the property was ‘sold’. As long as the date the SETTLOR purchased the property is within the Lenders’ requirements we are good to go. Vesting the title to the property with a Corporate Trustee does not constitute a sale and therefore does not affect the Lenders’ seasoning requirement. The only sale taking place now is when the END BUYER, who has secured his own personal mortgage for the purchase of the said property from the Corporate Trustee (who at the time is the OWNER of the property). However, because we are Investors, and have facilitated this transaction (which probably would not have taken place without us) we want to get paid. At least I do. WAH LA!!! Enter the ‘Nars Equity Holding Trust Transaction’ allowing all parties involved to do their thing. The ‘Seller’ sells, the ‘buyer’ gets his own personal financing in place and buys, and we the ‘investor’ gets paid. All this is accomomplished LEGALLY, ETHICALLY AND SEAMLESSLY.

    -If no INVESTOR was involved, there would really be no need to create a trust. It’s a ‘straight sale’.

    -However, if for ‘Estate Planning Purposes’ the seller (SETTLOR) has created an Illinois Type Land Trust (the type the NEHT is modeled after), and vested his Title with a Corporate Trustee, when he decided to sell. The sale taking place is still from the ‘Corporate Trustee’ (the property’s owner of record) to the ‘End Buyer’. The SETTLOR receives his payment from the trustee as per the trust agreement.

    -I believe this string is, as everything else on this forum, talking to NARS transactions. I don’t think anyone is advocating any other methods.

    #28125
    Avatar of jerry carey
    jerry carey
    Member

    Hello Gene!

    Thank you for your courteous and detailed response! You having posted for 5 years and myself for three years … neither of us are “newbies”. That said, I fully understand the fabulous NARS method of transactions and the details which you posted.

    The question I have and that was posed by SoCalGal is that lenders today are frowning on “trusts” because incompetant and ignorant investors have abused this method and created sales and transferred property under the disguise of a “trust”! Lender today do have “Sesoning Requirements” for recently formed Trusts … NARS or not … which have been created in some cases within 90 days and up to 12 months! This abuse of the utilizing “trusts” has even caused problems with some Title Insurance Companies not being willing to insure trust titles! There is a whole string of posts in the last year regarding this topic.

    I understand that the Traditional long term NARS transactions are not affected by this issue, but today most transactions are Short-Term pre-foreclosure (default) “Short Sale” type transactions that time-wise fall within the scope of these newer underwriting guidelines!

    How do we legally and ethically handle this potential and growing problem?

    Jerry Carey

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