Home Forum Contact Create an Account Sign In Create a Trust

Short Sale Flips- the best way

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Short Sale Flips- the best way

This topic contains 103 replies, has 0 voices, and was last updated by Avatar of homesavers NULL 10 years, 9 months ago.

Viewing 15 posts - 61 through 75 (of 105 total)
  • Author
    Posts
  • #27832
    Avatar of jerry carey
    jerry carey
    Member

    Scott … if the Trust Doc.’s already contain this rider guaranteeing the funding disbursement per the Beneficiary’s Agreement … then by simply reconveying title to the Settlor Beneficiaries/Sellers and then recording the sale from the individual sellers should solve and meet any end buyer lender’s sesoning requirements … should they arise. The rider agreement will guarantee funding disbursements as agreed … and bingo SEASONING PROBLEMS SOLVED!

    Jerry Carey

    #27833
    Avatar of homesavers
    NULL
    Member

    @Jerry Carey wrote:

    To Scott and others:

    I don’t know how to make what I’m saying any clearer! I’m saying the same thing as Scott all the way up to the ONE SALE and ONE CLOSING! The only problem is that there isn’t going to be a sale or closing if the End-buyer’s lender’s sesoning requirements are NOT satisfied. That was the premise of my scenario!

    The lender’s seasoning issues can be avoided by recording title back to the sellers/borrowers within the one escrow and then immediately recording the sale from the indivdiual sellers to the end-buyer. The transfer of title back from the Trustee to the Settlor Beneficiaries/Sellers does not create a sale … simply a reconveyance. The funding of this sale must be disbursed to trust/ee beneficiaries who are party to the one closing or just to the Trustee, who can do the disbursements outside and after the escrow closing! I proposed a rider agreement in the trust or a power-of-attorney to the Trustee or perhaps a Beneficiary (IB) to assure these disbursements.

    Jerry Carey

    Okay now you are clear. So what I understand here is that you can have a Seller sign an Option, find a Buyer, Deed the property to the Trustee, then Deed back to the Seller(which now include all beneficiaries not just the original seller/settlor) then sell the property to the end buyer with the new loan? The first deed is a reconveyance.
    You got it, Jerry! Title Seasoning issue may be solved. We had better have that POA signed ,sealed and delivered when the Trustee deeds back to the original Seller’s name. So I guess you will have to sign the last Deed as Seller Name, as Attorney in Fact? Since I am assuming the Seller is gone at this time? I am not sure how this one plays out. I will have to do one first.

    #27834
    Avatar of jerry carey
    jerry carey
    Member

    HomeSavers … close but no cigar!

    you can have a Seller sign an Option, find a Buyer, Deed the property to the Trustee, then Deed back to the Seller(which now include all beneficiaries not just the original seller/settlor) then sell the property to the end buyer with the new loan? The first deed is a reconveyance.

    This is a normal short-term EHTrust flip-type transaction. All I have proposed is that to satisfy end-buyer lender’s “seasoning requirements”, (provided they object to the Trust to begin with) is to simply have the Trustee reconvey the title in the singular closing back only to the sellers (previous creators and Settlor Beneficiaries (SB) of their trust exclusively) and then have the individual sellers immediately sell and transfer title to the end-buyers. The Trustee is a party to the escrow and the Rider Agreement, P-O-A, and an irrevocable escrow instruction signed by the individual sellers or Attorney-in-Fact via the P-O-A for said sellers … assure the funding is disbursed to the Trustee or Beneficiaries.

    Jerry Carey

    #27835
    Avatar of getsmart
    getsmart
    Member

    it may work for a normal quick flip, but it won’t work for short sale. the reason it work for a short sale is the shorting lender has to the see the final hud and approve it hence the deal will be killed. no shorting lender will agree to funds paid out to anyone but them or a second mortgage holder or lien holder usually no more than 2,500 bucks. if you use two closing maybe but a single closing isn’t going to happen.

    Sorry. :?

    #27836
    Avatar of homesavers
    NULL
    Member

    @Jerry Carey wrote:

    HomeSavers … close but no cigar!


    The Trustee is a party to the escrow and the Rider Agreement, P-O-A, and an irrevocable escrow instruction signed by the individual sellers or Attorney-in-Fact via the P-O-A for said sellers … assure the funding is disbursed to the Trustee or Beneficiaries.

    Jerry Carey

    This sounds feasible. Can I look for buyers now and not be concerned about the title seasoning?

    #27837
    Avatar of jerry carey
    jerry carey
    Member

    Thanks for your responses!

    GetSmart said:

    it may work for a normal quick flip, but it won’t work for short sale. the reason it [won't]work for a short sale is the shorting lender has to the see the final hud and approve it hence the deal will be killed.

    GetSmart … there is NO SHORT-SALE :!: There is the negotiation with the lender of an amount to satisfy/payoff the loan for less than the full balance owed. It works the same way as a Short sale, but isn’t one because there is no sale … only a satisfaction of mortgage with a reconveyance deed being recorded! This negotiation, payoff, and reconveyance is accomplishd because the Trustee, who holds title to the property is not the borrowers and the bank can O.K. the shorted amount! This negotiation, payoff, and reconveyance replaces the “A-B sale” with no break in the chain of title! It will work and is the way Scott Moyes has been doing it without problem. This is how he creates equity where there isn’t any :!: The only new twist … may be new seasoning issues arising out of forming the trust due to the abuse of Trusts by uninformed non-NARS Investors.

    HomeSavers said:

    This sounds feasible. Can I look for buyers now and not be concerned about the title seasoning?

    I hope and think so … but lets get some other informed opinions on the topic!

    Jerry Carey

    #27838
    Avatar of getsmart
    getsmart
    Member

    correction the lender can negotiate with the trustee however everything that is approve will have to be by the beneficiary who signed the mortgage. if you are talking about buying out the mortgage that is note buying which is only being done in bulk. never heard Scott mention this before or no one for that matter. most lenders won’t even speak about discounting a mortgage if the title is in someone elses name regardless of a trustee or not.

    lenders first question is the owner still living in the property and i have had lenders that stop negotiations entirely because the seller wasn’t on the deed or moved out of the house. plus the lender still has to review the final hud and they won’t allow a surplus of funds unless they go to them.

    #27839
    Avatar of jerry carey
    jerry carey
    Member

    GetSmart:

    The negotiation of a “shorted amount” is completed like any other “short sale” transaction. At the direction of the beneficiaries, the trustee makes a purchase offer to the sellers, who happen to be the Settlor beneficiaries of the NEHTrust! The offered sale price is less than what is owed on the loan!

    The only difference between a “Short Sale” and our transaction is that the buyer, the trust/ee already holds legal and equitable title and therefore no sale is made … rather a Satifaction of Mortgage, which does not cause a break in the “Chain of Title” triggering “seller seasoning issues with an end buyers lender. This is the way NARS members and especially Scott Moyes have been handling these types of short term NEHTrust transactions for a long time!

    This thread is about “something else” triggering the seasoning issues with the end buyer’s lender. SoCalGal posted underwriting guidelines for lenders making conventional loans stating that by simply forming the trust triggers a 12 month seasoning period!

    This thread is about how to legally and ethically circumvent or satify these new seasoning guidelines and to be able to continue closing these types of transactions! My supposition suggets transferring title back into the name of the borrowers/sellers as individuals and still protect the Beneficiaries’ financial position and funding disbursement in escrow!

    Jerry Carey

    #27840
    Avatar of areyes
    areyes
    Member

    aka junior bene buyout

    #27841

    @blackpuma wrote:

    Part of the problem is that you’re making false assumptions, such as beneficiaries being on title. Go back to basics.

    Blackpuma,

    That’s the “BamBoozel.”

    Thanks,
    Alan

    Ref.: http://www.landtrust.net/board/viewtopic.php?p=32925&highlight=#32925

    #27842
    Avatar of jerry carey
    jerry carey
    Member

    Not exactly Alvin!

    A Junior loan benefiary buyout is a little differnt twist on what I posted. Yes … if the Jr. Bene’s loan amount and discount is large enough to create the equity necessary to complete the transaction … it accomplishes the same thing! The Trust/ee pays off the the Sr. and JR. loan beneficiaries with HML Beneficiary funds and has clear title(without lender liens) enabling a sale to the end-buyer!

    If there isn’t any JR. beneficiary or if a discount large enough to make the deal financial worth doing cannot be negotiated, then the tranaction continues on in the same manner as a “Short Sale” negotiation.

    Jerry Carey

    #27843
    Avatar of homesavers
    NULL
    Member

    Scott has been doing these is a good point. We will have to go through Scott and Dave with REAP if we want to do these short term flips. I have spoken to a few Title co reps and they will not insure title if the property is in a trust for a short sale. She said it looks like fraud to them and they will not insure title. The lenders are spooked by the trust now as well. I would say if we are doing short term deals we should defer to Scott and co. We cannot do these without him. Period.
    Long term is a different story that is what the EHT was created for.
    So in conclusion, Long Term Deals can be done through NARS and short term deals need to be submitted to a Transaction Coordinator at REAP(Dave Salcido)

    #27844
    Avatar of jerry carey
    jerry carey
    Member

    Alan Gross:

    Sorry, but I personal don’t understand what you meant in your post quoting BlackPuma or the relevance to what this thread is talking about! Could you say it in English for me.

    Homesavers said:

    We will have to go through Scott and Dave with REAP if we want to do these short term flips.

    This amy be advisable but is not required if you are skilled and knowledgeable enough to put the transaction together yourself. It does take a lot of co-ordination of the various parts of the transaction to have it close smoothly!

    Homesavers said:

    I have spoken to a few Title co reps and they will not insure title if the property is in a trust for a short sale. She said it looks like fraud to them and they will not insure title. The lenders are spooked by the trust now as well.

    There is no Short Sale :!: Short sale fears cannot apply if a short sale doe not exist! Fears about Trusts … that’s why I proposed transferring title from the Trustee back into the names of the Individual sellers to close the sale to the end-buyer! Testamentary living intervivios trusts (Living Wills) are the most common form of title vesting today and these problems you cite above are put to rest by transferring the title back into the personal individual names form the Trust/ee :!:

    Jerry Carey

    #27845
    Avatar of homesavers
    NULL
    Member

    @Jerry Carey wrote:

    There is no Short Sale :!: Short sale fears cannot apply if a short sale doe not exist! Fears about Trusts … that’s why I proposed transferring title from the Trustee back into the names of the Individual sellers to close the sale to the end-buyer! Testamentary living intervivios trusts (Living Wills) are the most common form of title vesting today and these problems you cite above are put to rest by transferring the title back into the personal individual names form the Trust/ee :!:

    Jerry Carey

    So you are saying get the seller to deed to a trustee, negotiate a short payoff from the lender, find end buyer with a new loan for a higher amount than you negotiated, deed back to the original owner of record, escrow and title the whole process?

    Where are the payouts listed in the HUD-1? Seller cannot get a dime from the close. Somewhere you have to show that the investor (Us) that negotiated the deal gets paid. If you negotiate a sales price of say 80 percent of the actual appraised value (different from your low BPO that you got somehow from the lender) and then the Seller who is back on title sells to the end buyer with a new loan for full appraised value minus 10 percent down how do you show the ~ 10 percent profit that you made? Who gets paid the Trustee? They are not on title any more. The Seller cannot get that 10 percent. The end lender is going to want to know where that 10 percent is going because they see the HUD-1 too and they know there coming in 10 percent higher. An irrevocable demand? It is going to look fishy to the underwriters. Sounds like if you do not know what you are doing down to the last signed document the whole process can blow up at close.
    Back to REAP. Sorry just trying to understand this process so I can put it in practice.

    #27846
    Avatar of jerry carey
    jerry carey
    Member

    Homesavers said:

    So you are saying get the seller to deed to a trustee, negotiate a short payoff from the lender, find end buyer with a new loan for a higher amount than you negotiated, deed back to the original owner of record, escrow and title the whole process?

    That is fundamentally correct. That is what it takes to close a deal!

    The only point that you don’t get is that there are two simultaneous escrow closings … One for the shorted payoff and reconveyance to the Trustee … Individual Sellers do not get a dime or the shorted lender will never accept the terms! In this escrow … the HML funding is used to payoff said lender and clear title of the loan liens.

    In the next room immediately after the reconveyance escrow closing there is a Sale closing to the end buyer. Trust/ee vested owner reconveys title to the Settlor Beneficiaries who close the sale as seller to the end buyer! Rider agreement in Trust Documents, power-of-attorney and or irrevocable essrow instruction see that sale funding goes to the Trustee who can direct escrow to disburse funding according to the Beneficiary Agreement or take funding as Trustee and disburse outside of escrow! I haven’t done this … I don’t have all the answers … I’m looking for opinions from NARS and Members such as Scott Moyes to chime in here and say whether this is feasible or not or would have to be done another way and how :!:

    Jerry Carey

Viewing 15 posts - 61 through 75 (of 105 total)

The topic ‘Short Sale Flips- the best way’ is closed to new replies.

Posted in
Contact Form
Your Fullname:


Email Address:


Phone:


Best Time to Call:


Subject:


Your Message:


Security Code:

 

Can't read the above security code? Refresh