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NARS Trust does NOT circumvent seller title seasoning

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing NARS Trust does NOT circumvent seller title seasoning

This topic contains 46 replies, has 13 voices, and was last updated by Avatar of Administrator Administrator 4 years, 10 months ago.

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  • #29334
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @nyreattorney wrote:

    Therefore, the date of a no-consideration transfer from an Owner to a Trustee which constitutes a mere change of identity is not a Date of Acquisition under said rule.

    As such, it is not necessary to wait for case law or a clarification from FHA – it is laid out very clearly.

    YOU DA WOMAN!

    #29335
    Avatar of dave salcido
    dave salcido
    Member

    @nyreattorney wrote:

    “transfer from an Owner to a Trustee which constitutes a mere change of identity is not a Date of Acquisition under said rule.”

    Once again, your insightful explanation adds clarity to a muddled viewpoint. “Change of identity” is a very operable phrase. It connotes a change of identity rather than a change of entity. This could (should) put to rest any feeble attempts to claim an actual change of ownership in the literal sense or an acquisition by a NEW and separate title holder. In other words, under the law, transfer from owner to trustee is one in the same for the purposes of definition. Title transfer from Dave Salcido to David Salcido should not raise any eyebrows any more than transfer of title from Dave Salcido to Trustee for David Salcido.

    #29336
    Avatar of homesavers
    NULL
    Member

    @nyreattorney wrote:

    @Dave Salcido wrote:
    To further clarify my position. There is, as of yet, no precedent, no case law that I know of that has come to light with respect to FHA seasoning when a title is transferred from the property acquirer to his/her trustee. I believe Kathleen in her most recent post is probably the most informed of anyone (maybe in the entire country) on this subject, but once again, nobody will know for sure until it has been tested and FHA responds with a new guideline or opinion specific to the Equity Holding Trust.

    Thank you Dave for your kind words – I really appreciate it!

    With respect to FHA Seasoning Rules, it sets forth clearly in FHA Mortgagee Letter 2006-14 that:

    resale may not occur 90 or less days from the last sale or Seller’s date of acquisition
    Date of Acquisition is defined therein as the “Date of Settlement on the Seller’s Purchase of that property”

    Therefore, the date of a no-consideration transfer from an Owner to a Trustee which constitutes a mere change of identity is not a Date of Acquisition under said rule.

    As such, it is not necessary to wait for case law or a clarification from FHA – it is laid out very clearly.

    With that clarified. Now we just have to figure out how to get the end buyer’s lender to fund a loan with a Trustee involved. Lender will have to wire the funds through escrow to the Trustee who will then distribute according to the Beneficiary agreement. This may only work in Attorney closing States but I am not sure. Lender may say who is this Equity Holding, Corp that I am paying? And demand the Deed go back into the original Seller’s name. This has happened believe me.
    So there must be a way to do this right. Most do not know otherwise they would not even be fooling with “flash funding” Bill is working with Chad and he uses “flash funding” for the day in a Double close. So there is something missing here.

    #29337
    Avatar of nyreattorney
    nyreattorney
    Member

    Funding in a non-attorney state would seem to be difficult under the circumstances. In the current real estate industry, there is a witch hunt going on folks, they don’t need evidence, they need a hunch. Then, they ruin your life, your business etc. My suggestion is get to know some good real estate attorneys in your area and have everyone represented from the outset.

    The Seller on your end contract is the Trustee. Technically, net proceeds can be made payable to the Trustee who then distributes according to the Trust Agreement. I would not have the proceeds made payable to the beneficiary as a matter of practicality. In this day and age, a Lender is loathe to make checks out to 3rd parties.

    As far as flash funding, while I do not see any statutory or case authority, google land trust & FBI and it is obvious that they are looking at these transactions carefully. It seems that they take the approach that funding the 1st from the 2nd demonstrates that the investor did not “pay” for the property on the 1st.

    I can’t see what difference it makes – many transactions close dry and are funded from difference sources. Unfortunately it is appearances these days that count, not legal precedent.

    #29338
    Avatar of homesavers
    NULL
    Member

    This is from the F.B.I. Web site at: http://www.fbi.gov/publications/fraud/mortgage_fraud08.htm

    “Short Sale Schemes – Modified

    “Short sale fraud schemes continue to be used in combination with foreclosure rescue schemes in an effort to victimize homeowners and financial institutions (see Appendix A for an explanation of a short sale scheme). Perpetrators across the country are recruiting real estate agents and paying them referral fees for locating and soliciting homeowners undergoing foreclosure. Homeowners are entering into agreements with perpetrators deeding their property to them in the form of a land trust. The homeowner is listed as the beneficiary of the trust and the real estate agent is listed as the trustor. The perpetrators then negotiate a short sale with the lender. After the short sale, the real estate agent sells the property for a profit to another previously identified buyer, but the lender and the homeowner do not know this. In effect, the perpetrator sells the property for less than the mortgage and re-sells the property, often the next day, for a profit.” Source see above

    Note the second to last sentence. That is why full disclosure is so important. Everyone has to know what is going on in writing. Sure we could bring Attorneys into our deals but how much is that going to cost?

    #29339
    Avatar of homesavers
    NULL
    Member

    @nyreattorney wrote:

    Funding in a non-attorney state would seem to be difficult under the circumstances. In the current real estate industry, there is a witch hunt going on folks, they don’t need evidence, they need a hunch. …

    Unfortunately it is appearances these days that count, not legal precedent.

    That is why you need to have full disclosure to all parties involved in the transaction. If everybody knows what is going on then where is the fraud? Sure it would be nice to have an Attorney following you around whenever you work a deal but they cost 150 bucks an hour. Eventually I would like to be like Donald Trump with 13 Lawyers following him around but at this point I am not there yet.

    In terms of hunches and appearances this is only a problem if you do not know the Law. If you know the Law then you have no problem right? If you come under indictment then you must answer it correctly that is when you need a Lawyer unless of course you think you can operate Pro Se. Anyway, I am not a Lawyer I will leave that up to Kathleen and other Licensed professionals.

    #29340
    Avatar of homesavers
    NULL
    Member

    since I have no editing capabilities I was unable to correct the spelling of the subject title in the previous post to: Ultra Vires

    Look it up. It is good to know Latin. The language Lawyers use. Our country is run by Lawyers, mostly. So it would be good to study a little latin here and there. Quid pro quo and Carpe diem

    #29341
    Avatar of nyreattorney
    nyreattorney
    Member

    I have 2 comments re: hiring lawyers..

    1. $150 a hour? Who works that cheap lol!
    2. Real Estate attorneys charge a flat fee (or that is the custom here)

    I agree about the full disclosure and there not being a fraud if the disclosure is made. However, notice the FBI now mentions land trusts. They are on the radar and I personally like to fly under the radar.

    Since I am the only attorney in my area knowledgeable about trusts and there is alot of work involved in structuring this transaction, I charge a fee of $5,000. Mind you, houses are going for $300-$700k with profits of $40k to $150k for investors.

    Let me point out that if you should get indicted and they can indict based on a ham sandwich, the cost of a criminal attorney can climb into the hundreds of thousands (I picked the wrong end of the profession). I don’t want to see any of you in that position.

    Please, just be careful.

    #29342
    Avatar of homesavers
    NULL
    Member

    @nyreattorney wrote:

    Let me point out that if you should get indicted and they can indict based on a ham sandwich, the cost of a criminal attorney can climb into the hundreds of thousands (I picked the wrong end of the profession). I don’t want to see any of you in that position.

    Please, just be careful.

    I do not want to be between those pieces of bread. If so I had better get a good public defender :) I would gladly pay you 5Gs at close but I do not think you can practice in California.

    #29343
    Avatar of sstanton
    sstanton
    Member

    This paragraph probably should have been included with the above short sale paragraph

      Short-sale Schemes – Short-sale schemes are desirable to mortgage fraud perpetrators because they do not have to competitively bid on the properties they purchase, as they do for foreclosure sales. Perpetrators also use short sales to recycle properties for future mortgage fraud schemes. Short-sale fraud schemes are difficult to detect since the lender agrees to the transaction, and the incident is not reported to internal bank investigators or the authorities. As such, the extent of short sale fraud nationwide is unknown. A real estate short sale is a type of pre-foreclosure sale in which the lender agrees to sell a property for less than the mortgage owed. In a typical short sale scheme, the perpetrator uses a straw buyer to purchase a home for the purpose of defaulting on the mortgage. The mortgage is secured with fraudulent documentation and information regarding the straw buyer. Payments are not made on the property loan causing the mortgage to default. Prior to the foreclosure sale, the perpetrator offers to purchase the property from the lender in a short-sale agreement. The lender agrees without knowing that the short sale was premeditated. The mortgage owed on the property often equals or exceeds 100 percent of the property???s equity.

    This was from the same article in the Select Schemes Defined section.

    Stu

    #29344
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    It’s a good thing NARS and REAP don’t do any of those things. Not even close. Now let’s get back to doing some damn business. The sky did not and is not falling. GEEEEEZ.

    #29345
    Avatar of corkhorner_2
    corkhorner_2
    Member

    Stay with it, scott. Stay with it.

    c h

    #29346
    Avatar of homesavers
    NULL
    Member

    @Scott_L._Moyes wrote:

    It’s a good thing NARS and REAP don’t do any of those things. Not even close. Now let’s get back to doing some damn business. The sky did not and is not falling. GEEEEEZ.

    Good to know. I would love to do some business with you Scott. I have 18 properties coming from one Realtor. You want to help with them? How are we going to facilitate this?

    #29347
    Avatar of homesavers
    NULL
    Member

    Nevermind, Scott thanks for all your help through the years.

    #29348
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @homesavers wrote:

    I would love to do some business with you Scott. I have 18 properties coming from one Realtor. You want to help with them? How are we going to facilitate this?

    My obligation is exclusive to current OCS Members only. If you or anyone else wants to join OCS just drop me an email and I’ll tell you how it works and how to join.

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