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How to Get Investors to Beat Down Your Door Begging For Help

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing How to Get Investors to Beat Down Your Door Begging For Help

This topic contains 21 replies, has 0 voices, and was last updated by Avatar of dave salcido dave salcido 11 years, 1 month ago.

Viewing 15 posts - 1 through 15 (of 23 total)
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  • #6323
    Avatar of dave salcido
    dave salcido
    Member

    My friend TJ Marrs just returned from a real estate investment club convention in Las Vegas, (they have a convention for just about everything in Vegas don’t they?). Every creative financing real estate investor club operator there had the same concern. What is the passage of House Resolution (HR) 4173, The Wall Street Reform and Consumer Protection Act of 2009 going to do to the creative real estate investment industry? Section 1073 and 1074 of the bill states that anyone that sells more than one property within a span of 36 months is to be considered a “dealer” and is thus required to have a federally regulated mortgage lenders license.

    This bill passed overwhelmingly in the house. The senate is expected to do the same. Do you trust the Bozos in Washington to execute this law fairly? The name of the bill, Wall Street Reform and Consumer Protection Act of 2009 sounds good huh? Don’t judge a book by its cover. (over 1200 pages to be exact!). I’ll bet even its author, the esteemed Barney Frank did not read it cover to cover.

    Anyway, here is what concerned the attendees at the conference. They feel that this new legislation is the death blow to creative real estate financing as we know it. They are probably right. Most investors will never submit to regulation like this. They are way too independent to become government certified mortgage lenders. I suspect that we will soon see grown men opening lemonade stands on neighborhood street corners across America……. until that too is regulated into oblivion. Ah, the spirit of the entrepreneur!

    The good news for NARS members is that even though we too think this bill stinks to high heaven, it doesn’t really affect us. As land trust beneficiaries, we acquire personal property, not real estate. Trustees sell real estate. We don’t. We receive a beneficiary interest in the trust upon termination of the trust. As far as I know, trustees are still immune from this law with respect to “dealer” status. That could change, but for now, we are safe from the tentacles of big government.

    So, here is my suggested Craigslist post to grieving real estate investors, “Is HR4173 killing you? I have an answer.”

    People, the “answer” is still the same.
    1. Don’t enter into a seller carry contract of any kind.
    2. Put the property into a NARS Equity Holding Land Trust.
    3. Acquire a beneficiary interest in that trust.
    4. Direct the trustee to sell the property at the appropriate time.
    5. Disseminate the proceeds of the sale to the beneficiaries and terminate the trust.
    6. Acquire another interest in a land trust, and another, and another, and another…….I think you get the picture.

    In summary, “If you build it, (an EHT), they will come!”

    #32441
    Avatar of peter@amakya
    peter@amakya
    Member

    David, you speak the truth.

    #32442
    Avatar of shortsaleguy
    shortsaleguy
    Member

    @Dave Salcido wrote:

    …the passage of House Resolution (HR) 4173, The Wall Street Reform and Consumer Protection Act of 2009 going to do to the creative real estate investment industry? Section 1073 and 1074 of the bill states that anyone that sells more than one property within a span of 36 months is to be considered a “dealer” and is thus required to have a federally regulated mortgage lenders license.

    In summary, “If you build it, (an EHT), they will come!”

    Wall Street Reform and Consumer Protection Act of 2009 is the phony marketing name.

    The real name should be: Keep the Consumer from becoming a Producer of Wealth and Wall Street New way to make money Act.

    That is Government regulation at it’s finest. That is why Lawyers run this country so they can know all the loopholes from the Laws they promulgate. They disguise them as protecting consumers but what they are doing is protecting their own wealth otherwise they would have bailed out the American People and not the Banks.

    The way to deal with these wealth redistribution Laws is in the form of a TRUST. Why do you think they were created. This regulation may just make us all Multi-Millionaires(if we take ACTION). As for the rest of the investors out there you had better call Bill and learn about this Trust he has been talking about for while.

    #32443
    Avatar of sstanton
    sstanton
    Member

    Boy, do you think that now would be a good time for Bill to put together an affiliate program for network members. These investors will be flocking to buy into the network. Why should they go through us when the can get the whole enchilada from the store?

    In the meantime (feelin’ the love – see ‘No book… no bucks’), I plan to push this to the limit and see if a buck or two will fall my way.

    #32444
    Avatar of peter@amakya
    peter@amakya
    Member

    As an immigrant to this great country I cannot for the life of me understand why everyone is bad mouthing the government on sites like this.

    If you really want to get into it, fine, outside of this board, but please stay on topic here.

    David I know you feel strongly about the guys in Washington, OK, ditto shortsaleguy and I’m sure a whole heap of others.

    If it’s politics let us start a new section and we can mix it up. Some rough and tumble is always good for the brain cells.

    #32445
    Avatar of shortsaleguy
    shortsaleguy
    Member

    You are right, Peter. We should not bad mouth the Government. We really should keep on top of things here by piloting the ship through these rough waters. The Ship being the Equity Holding Trust. The waters being the Laws and regulations out there that are always changing.

    #32446
    Avatar of dave salcido
    dave salcido
    Member

    @peter@amakya wrote:

    As an immigrant to this great country I cannot for the life of me understand why everyone is bad mouthing the government on sites like this.

    David I know you feel strongly about the guys in Washington, OK, ditto shortsaleguy and I’m sure a whole heap of others.

    If it’s politics let us start a new section and we can mix it up. Some rough and tumble is always good for the brain cells.

    I appreciate your devotion to America. I too am an immigrant to the sovereign state of Utah from the sovereign state of California; born to goodly parents from the sovereign state of Arizona whose parents immigrated legally to these united States from the beautiful country of Mexico.

    With due respect, I believe it is imperative that in order to identify solutions for our EHT transactions, we must first identify what may be obstacles in our way toward success. If legislation is a stumbling block and deteriorates our un-a-LIEN-able rights, we go on the offensive to right the wrongs. I, nor anyone else on this forum is knocking this greatest of all countries. Heaven forbid! I love America. I would fight and die to protect what my grandfather George Washington sacrificed so dearly for my posterity and me.

    True Americans love America. True Americans do not criticize America. True Americans may criticize bad law and bad law makers. But more than anything else, true Americans are resilient and we are great at fixing broken things. That’s what true American NARS members do. We fix broken things. We are not talking about politics. We are talking about life. We are talking about rescuing the huddled masses yearning to breathe free. Call it politics if you must. I see it a little differently. Regardless, I thank you for your contributions and your perspective.

    #32447
    Avatar of dgraber
    dgraber
    Member

    I tried to look up sections 1073 and 1074 in the final version of HR 4173 that passed the House. On thomas.loc.gov here’s the link I found:

    http://thomas.loc.gov/cgi-bin/query/D?c111:2:./temp/~c111KHuIQC::

    Interestingly, there appears not to be any section 1073 or 1074. Any idea where the relevant text might be found instead?

    #32448
    Avatar of dave salcido
    dave salcido
    Member

    @dgraber wrote:

    I tried to look up sections 1073 and 1074 in the final version of HR 4173 that passed the House. On thomas.loc.gov here’s the link I found:

    http://thomas.loc.gov/cgi-bin/query/D?c111:2:./temp/~c111KHuIQC::

    Interestingly, there appears not to be any section 1073 or 1074. Any idea where the relevant text might be found instead?

    H.R.4173
    Restoring American Financial Stability Act of 2010 (Engrossed Amendment Senate – EAS)

    SEC. 1073. PROHIBITED PAYMENTS TO MORTGAGE ORIGINATORS.

    Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (j) the following:

    `(k) Prohibition on Steering Incentives-

    `(1) IN GENERAL- For any consumer credit transaction secured by real property or a dwelling, no loan originator shall receive from any person and no person shall pay to a loan originator, directly or indirectly, compensation that varies based on the terms of the loan (other than the amount of the principal).

    `(2) RESTRUCTURING OF FINANCING ORIGINATION FEE-

    `(A) IN GENERAL- For any consumer credit transaction secured by real property or a dwelling, a loan originator may not arrange for a consumer to finance through the rate any origination fee or cost except bona fide third party settlement charges not retained by the creditor or loan originator.

    `(B) EXCEPTION- Notwithstanding subparagraph (A), a loan originator may arrange for a consumer to finance through the rate an origination fee or cost if–

    `(i) the loan originator does not receive any other compensation, directly or indirectly, from the consumer except the compensation that is financed through the rate;

    `(ii) no person who knows or has reason to know of the consumer-paid compensation to the loan originator, other than the consumer, pays any compensation to the loan originator, directly or indirectly, in connection with the transaction; and

    `(iii) the consumer does not make an upfront payment of discount points, origination points, or fees, however denominated (other than bona fide third party settlement charges).

    `(3) RULES OF CONSTRUCTION- No provision of this subsection shall be construed as–

    `(A) limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;

    `(B) restricting a consumer’s ability to finance, at the option of the consumer, including through principal or rate, any origination fees or costs permitted under this subsection, or the loan originator’s right to receive such fees or costs (including compensation) from any person, subject to paragraph (2)(B), so long as such fees or costs do not vary based on the terms of the loan (other than the amount of the principal) or the consumer’s decision about whether to finance such fees or costs; or

    `(C) prohibiting incentive payments to a loan originator based on the number of loans originated within a specified period of time.

    `(4) LOAN ORIGINATOR- For the purposes of this section, the term `loan originator’–

    `(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain, with respect to credit to be secured by real property or a dwelling–

    `(i) arranges for an extension, renewal, or continuation of such credit;

    `(ii) takes an application for credit or assists a consumer in applying for such credit; or

    `(iii) offers or negotiates terms of such credit;

    `(B) does not include any person who is not otherwise described in subparagraph (A) and who performs purely administrative or clerical tasks on behalf of a person who is described in subparagraph (A); and

    `(C) does not include a person that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless the person is compensated by a lender or other loan originator or by any agent of such lender or other loan originator.’.

    SEC. 1074. MINIMUM STANDARDS FOR RESIDENTIAL MORTGAGE LOANS.

    (a) In General- No rule, order, or guidance issued by the Bureau under this title shall be construed as requiring a depository institution to apply mortgage underwriting standards that do not meet the minimum underwriting standards required by the appropriate prudential regulator of the depository institution.

    (b) Ability To Repay-

    (1) TILA AMENDMENT- Section 129 of the Truth in Lending Act (15 U.S.C. 1639), as amended by section 1074 of this Act, is further amended by inserting after subsection (k) the following:

    `(l) Ability To Repay-

    `(1) IN GENERAL- No creditor may make a loan secured by real property or a dwelling unless the creditor, based on verified and documented information, determines that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance, and assessments.

    `(2) MULTIPLE LOANS- If the creditor knows, or has reason to know, that 1 or more loans secured by the same real property or dwelling will be made to the same consumer, the creditor shall, based on verified and documented information, determine that the consumer has a reasonable ability to repay the combined payments of all loans on the same real property or dwelling according to the terms of those loans and all applicable taxes, insurance, and assessments.

    `(3) BASIS FOR DETERMINATION- A determination under this subsection of a consumer’s ability to repay a loan described in paragraph (1) shall include consideration of the consumer’s credit history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio or the residual income the consumer will have after paying non-mortgage debt and mortgage-related obligations, employment status, and other financial resources other than the consumer’s equity in the dwelling or real property that secures repayment of the loan.

    `(4) INCOME VERIFICATION- A creditor shall verify amounts of income or assets that such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer’s Internal Revenue Service Form W-2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer’s income or assets. In order to safeguard against fraudulent reporting, any consideration of a consumer’s income history in making a determination under this subsection shall include the verification of such income by the use of–

    `(A) Internal Revenue Service transcripts of tax returns; or

    `(B) a method that quickly and effectively verifies income documentation by a third party subject to rules prescribed by the Board.

    `(5) PRESUMPTION OF ABILITY TO REPAY- Any creditor with respect to any consumer loan secured by real property or a dwelling is presumed to have complied with this subsection with respect to such loan if the creditor–

    `(A) verifies the consumer’s ability to repay as provided in paragraphs (1), (2), (3), and (4); and

    `(B) determines the consumer’s ability to repay using the maximum rate permitted under the loan during the first 5 years following consummation and a payment schedule that fully amortizes the loan and taking into account current obligations and all applicable taxes, insurance, and assessments.

    `(6) EXCEPTIONS TO PRESUMPTION- Notwithstanding paragraph (5), no presumption of compliance shall be applied to a loan–

    `(A) for which the regular periodic payments for the loan may–

    `(i) result in an increase of the principal balance; or

    `(ii) allow the consumer to defer repayment of principal.

    `(B) the terms of which result in a balloon payment, where a `balloon payment’ is a scheduled payment that is more than twice as large as the average of earlier scheduled payments; or

    `(C) for which the total points and fees payable in connection with the loan exceed 3 percent of the total loan amount, where `points and fees’ means points and fees as defined by section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)), except that, for the purposes of computing the total points and fees under this subparagraph, the total points and fees attributable to any premium for mortgage guarantee insurance provided by an agency of the Federal Government or an agency of a State shall exclude any amount of the points and fees for such insurance greater than 1 percent of the total loan amount.

    `(7) EXEMPTION-

    `(A) The Board may revise, add to, or subtract from the criteria under paragraphs (5) and (6) and subparagraphs (B) and (C) of this paragraph upon a finding that such regulations are necessary or appropriate to effectuate the purposes of this title, to prevent circumvention or evasion thereof, or to facilitate compliance with this subsection.

    `(B) BRIDGE LOANS- This subsection does not apply to a temporary or `bridge’ loan with a term of 12 months or less, including to any loan to purchase a new dwelling where the consumer plans to sell a current dwelling within 12 months.

    `(C) REVERSE MORTGAGES- This subsection does not apply with respect to any reverse mortgage.

    `(8) SEASONAL INCOME- If documented income, including income from a small business, is a repayment source for an extension of credit secured by residential real estate or a dwelling, a creditor may consider the seasonality and irregularity of such income in the underwriting of and scheduling of payments for such credit.’.

    (2) CONFORMING AMENDMENT- Section 129 of the Truth in Lending Act (15 U.S.C. 1639), as amended by this Act, is amended–

    (A) by redesignating subsections (k), (l), and (m) as subsections (m), (n), and (o), respectively; and

    (B) in subsection (o), as so redesignated, by striking `(l)(2)’ and inserting `(n)(2)’.

    #32449
    Avatar of shortsaleguy
    shortsaleguy
    Member

    I am sorry am I missing something? I do not see where this would have an effect on us at all. As matter of fact it seems to be a good thing unless it tries to eliminate free enterprise.

    #32450
    Avatar of dave salcido
    dave salcido
    Member

    @shortsaleguy wrote:

    I am sorry am I missing something? I do not see where this would have an effect on us at all. As matter of fact it seems to be a good thing unless it tries to eliminate free enterprise.

    You have to read it very carefully. Real estate attorneys are claiming that, according to the definition of a “loan originator”, if you sell more than one property that is the product of a seller carry type of contract; CFD, wrap, lease/option, etc within a 36 month period, you are considered a loan originator and you must be licensed. If not, you suffer the consequences.

    ALSO, as a loan originator, you may have to take responsibility for ensuring that the buyer is capable of making the mortgage payments or else you may be liable either civilly or criminally. If you are OK with being a loan originator; licensed, certified, 100% responsible for the actions of the buyer in the event of default, more power to you.

    And as far as eliminating free enterprise, I don’t think this bill has any more influence on free enterprise than free trade has on manufacturing in the USA.

    #32451
    Avatar of neftalipazo
    neftalipazo
    Member

    Dave.

    Thank you for the information. I do understand and believe you 100%. I just do not see how we can take advantage of this with investors using the EHT. Are we going to be sending them a NEO??? If so, under what arrangements? It is a bit blurry for me.

    Neftali.

    #32452
    Avatar of dave salcido
    dave salcido
    Member

    @NeftaliPazo wrote:

    Dave.

    Thank you for the information. I do understand and believe you 100%. I just do not see how we can take advantage of this with investors using the EHT. Are we going to be sending them a NEO??? If so, under what arrangements? It is a bit blurry for me.

    Neftali.

    1. Make offer to acquire interest in “don’t wanter” investor homeowner’s property (even if it is over encumbered)
    2. Owner agrees to give you 50% co-beneficiary interest in his land trust (Bill’s short version proposal explains why they will do this)
    3. Get homeowner to put the property in trust and assign you as a co-beneficiary on the beneficiary agreement (no need for NEO)
    4. Settle or ameliorate the mortgage to change over encumbrance into equity (if you don’t know how to do this, Bill or I can help you with it)
    5. Sell the property for a profit to investor owner and you.

    Does this help?

    #32453
    Avatar of mtnwizard49
    mtnwizard49
    Member

    True Americans love America. True Americans do not criticize America. True Americans may criticize bad law and bad law makers. But more than anything else, true Americans are resilient and we are great at fixing broken things. That’s what true American NARS members do. We fix broken things. We are not talking about politics. We are talking about life. We are talking about rescuing the huddled masses yearning to breathe free. Call it politics if you must. I see it a little differently. Regardless, I thank you for your contributions and your perspective.
    _________________

    You have to be kidding. True Americans aren’t sheep. It’s un-American NOT to exercise your constitutional right to voice your disapproval of the trashing of the economy by a president who came into office with a huge surplus and then gave it away to his political cronies under his philosphy of corporate welfare. That is what ruined this economy.

    It is un-American to sit on our duffs and watch the killing of innocent civilians in other countries in the pursuit of oil or political advantage, or the loss of privacy. Say “bomb” or “terrorist” or any of dozens of other words on the telephone and see how fast you have company.

    The America of sixty years ago no longer exists and will never exist again. Those who naively say different are ostriches. We are NOT the greatest country in the world. The great countries are those who care for their people. We are the only industrialized country on earth that does not provide free healthcare for all of its people. Why? Greed. America has lost its soul and it takes a patriotic American to speak out when we are wrong.

    #32454
    Avatar of shortsaleguy
    shortsaleguy
    Member

    @Dave Salcido wrote:


    2. Owner agrees to give you 50% co-beneficiary interest in his land trust (Bill’s short version proposal explains why they will do this)

    Does this help?

    This helps a Million Bucks worth. How do I get the Short Version of the Proposal? Finally on to something. I was wondering when we would get here.

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