Barry Hart Blog

Wholesale buying and selling of deeply discounted houses in any market

Barry Hart — Mon, 21 Dec 2009 08:00:00 GMT

The markets' where I live are bad, I can't make any money there wholesaling properties you say. Well I say you are dead wrong!

I can prove it too.

Wholesaling of houses in any market is the single fastest way for any investor (newbie or veteran) to money and quickly too. That is if you call making anywhere from ten to fifteen thousand dollars cash or more in thirty days or less making money fast.

I know I do. But I have no money, my credit is shot and I have heard you need money and credit to do deals you say. Wrong again.

PART 1 OF 6 GETTING YOUR FEET WET WITH LITTLE TO NO RISK AND NO MONEY

To start with let's talk about doing just one deal:

Banish from your mind all the negative thoughts you have read, heard about from others including "investors". Get some leads from For Sale By Owner ads on Craigslist, Backpage and other free online sites for your area. Call and ask them about the house they are selling. Just basic information about the house, why they are selling etc. Now if it sound like they are just putting the for sale sign out to see what they can get, politely end the call (keep their information to follow up with in 45 to 60 days) and call the next one. Keep doing that until you kind someone who "needs" to sell due to any specific situation that has put them in a position that they really need to sell that house. The more you do this the better you will get at it. Now if the reason they are selling is that they are behind on mortgage payments or worse, they are facing a trustee sale or sheriff's sale and they just want out of that house without getting their credit ruined for a number of years, the best advice I can give you is to find a reliable and competent short sale investor in your area.

Tell that investor that you have a seller that you have spoken with on the phone who is in a short sale posture. Ask that investor what he, she pays for such leads. Now be careful here. You cannot claim a commission unless you are a Realtor. You can sell that lead to the investor after getting an agreement in writing from them. Using the 'wash, rinse and repeat formula) do that three times per week for $200 per lead and you will have a $2,400 per month income. Just carefully check the laws in your state and make sure you are not violating any of such laws the way you are doing/structuring your transaction.

During your telephone call with the owner seller ask what needs to be done to house to put in condition for a sale that will bring the best price. Go room to room with your questions. Most of time the seller will say nothing needs to be done the house is just fine, or they will say that 7 years ago they spent 30,000 on a remodel. They just ask them to give you a ball park, just a ballpark number of what it would take to spruce up the house with paint, inside and out, floor tile, rugs and upgrade the bathrooms and kithchen--again emphasize just a ballpark, you are not going to hold them toany thing. If they give you a range of ten to fifteen thousand, go with the fifteen thousand when you discuss this with your short sale investor or if this is a non-short sale that you are going to do yourself we will go over that and other valuable proven content next week on Part 2.

Now go out and find some leads!

Information a Short Sale Investor Must Have From the Listing Agent

Barry Hart — Wed, 11 Nov 2009 08:00:00 GMT

As a short sale investor, you can really speed up your analysis of a deal, especially if you are working with Realtors who send you leads off the MLS by getting the following questions answered for you at the time the specific lead is sent to you:

Ask the Realtor to find out from the listing agent the following information:

1) Current market value of property, (validated by solid comps.);

2) The number of loans and other liens of any kind--judgments, federal tax liens, HOA liens etc;

3) The amount outstanding on each loan;

4) Date of most recent BPO by each lender, and if the BPO was interior/exterior and was listing agent present,

5) Who lender/servicing agents are and type of loan, Conventional. Fannie Mae, Freddie Mac, FHA, VA.

6) Any offers pending,

7)Have they had any offers, if so how many.

8)What is the CDOM,

9)Name of different lenders,

10) Condition of property--just a ball park of rehab/remodel cost estimate (as a Realtor,not as a contractor),

11) Neighborhood--rate it from 1 to 10 where 1 is a War Zone--if only listing agent knows neighborhood ask him/her about it;

12) Date Short Sale package submitted, any updates requested that have not been supplied to Loss Mitigation;

13) Who is handling SS package with lender/servicing agent.(outsourced or handled by listing agent), if no package has been submitted, you can handle that as well to the extent you have them outsourced or do them yourself and claim a loss mitigation fee on the HUD-1 if you are using a different entity.

14) Price History --need this on buyers page too, along with assessors info on sales;

15) Trustee sale date? Has sale been scheduled, if so, when? Any sale dates before? How many continuances?

16) Is there an approval letter(s) for any past offers?

17) Was a draft HUD-1 submitted to each lender with prior offer?

18) Were prior offers for cash or contingent on financing?

You might want to also tell the Realtor the following:

I am an investor and I make cash offers with Proof of Funds letters on every short sale deal from a Realtor, if listing agent, I will do dual agency, if buyer's agent, just find the deal and send me the information (and the Realtor side of the Buyer's Page--the offer will be submitted by you) set forth above. I can close within 30 days or less after approval letter(s)

RESPA NOW HAS AN EXPANDED SCOPE and COVERAGE

Barry Hart — Tue, 27 Oct 2009 07:00:00 GMT

. After mounting pressure over the last two years, RESPA again appeared on the lending scene early this year (Feb. 2009), HUD adopted new rules likely to more than double the number of loans covered by the act.

These new rules implement 1992 statutory amendments. They have transformed lending in three ways: 1. They extend RESPA coverage to refinancings and subordinate liens. 2. They clarify that RESPA covers origination and funding of mortgages-- a legal issue that needed resolving. 3. They exempt from disclosure requirements any applications rejected within three business days of receipt. A number of amendments to HUD's 1992 rules also are included.

RESPA now covers virtually all consumer-purpose and investment-purpose loans secured by one-to-four-family dwellings. RESPA's new exemptions took effect on March 14, and expanded coverage and disclosures take effect Aug. 9. And there's more coming-- HUD deferred several major decisions and planned to make more clarifications this year. RESPA perspective RESPA was enacted in 1974 to help homebuyers shop for loans.

It prohibited referral fees and kickbacks, and required lenders to disclose information about settlement procedures and costs in writing. In 1983, it was amended to cover "controlled business arrangements," and required disclosure of whether a lender has an ownership stake in the referred settlement service company; all fees paid to that affiliate; and the fact that use of that settlement company is not required. Catching the mortgage industry by surprise, HUD amended RESPA in 1992 to cover first-lien refinancings of "federally related mortgage loans," which included almost all first-lien and residential loans, both conventional and government. HUD also addressed a number of controversial coverage, referral fee, and business issues. Equally surprising, Congress passed the junior lien amendment.

The new rules are almost certain to gain new attention from HUD's fledgling RESPA Enforcement Unit, which for the past three years has worked with state and federal agencies and community groups to identify and investigate RESPA violations. Noncompliance has brought severe penalties to lenders and service providers. What's covered, what's not The best way to ensure compliance with RESPA is to fully understand which disclosures are required and when they apply. The following summary provides a reference point for lenders. 1. All refinancings are now covered. Under the new rules, the definition of a refinancing is simple and mirrors the Truth in Lending Act and its implementing Regulation Z. Generally speaking, if a new note is created, then the transaction is a refinancing. For covered refinancings, lenders must provide the good faith estimate disclosure and either the HUD-1 or new HUD-1A settlement statement. 2. For home equity lines of credit, lenders can substitute disclosures required by the Truth in Lending Act for RESPA disclosures. Therefore, lenders can provide the truth-in-lending equity line brochure and disclosures in lieu of the RESPA good faith estimate and special information booklet. 3. While its farm property coverage was once unclear, RESPA now carries an absolute exemption of a single transaction for properties of 25 or more acres, regardless of the purpose of the loan or whether the land is vacant or has a residential structure. Agricultural loans involving properties of fewer acres are still exempt as business credit. 4. Loans for vacant land or unimproved property covered only if loan proceeds will be used within two years of settlement to construct or purchase a dwelling to be placed on that property. Properties of 25 acres or more are exempt even if a residential structure is added within two years. 5. Temporary financings, such as construction loans. are exempt from RESPA in most instances. However, RESPA covers temporary loans issued with commitments by the lender to provide permanent financing, with or without conditions. RESPA presumes a loan exceeding two years is not "temporary financing." Therefore, any construction loan with a term of at ]east two years that is made for a new or rehabilitated one-to-four-family structure is covered, unless the loan is to a bona fide builder. RESPA does not cover "bridge" or "swing" loans, which are the short-term loans made to cover interim obligations of a person who is selling a property and buying another.6. RESPA does not cover secondary market transactions, except for new rules affecting escrow and servicing transfers.

Mers--now a recognized flaw in the mortgage meltdown

Barry Hart — Mon, 26 Oct 2009 07:00:00 GMT

The Supreme Court of Kansas deals a blow to MERS.

For years, MERS has had a free and very lucrative ride acting for ten to hundreds of thousands of pooled notes held by investors who have simply registered to a member of this Delaware entity. MERS' name almost always appears as the beneficiary of the trust or mortgage deed that secures the note a borrower signs wherein certain real property is the collateral of that loan. The deed of trust/mortgage is recorded, as everyone who has ever signed a mortgage or trust deed recognise.

Clearly, a litigation tsunami is on its way and it will likely attack mortgage brokers loan officers, attorneys who participated in putting these deals together, many of the so-called Wall Street Giants will no doubt not be immune from being named as defendants as well. In order to see the reason for this prediction, some further description of how MERS was set up and why is in order.

Now with the uncontrolled number of defaulted loans, and foreclosure actions being filed and pursued across the country more judges are being called upon to determine whether MERS who acts as the plaintiff to those lawsuits, has any standing or right to be the forelcosing party. MERS is not the note holder, it is not a party to any of the countless assignments/sales of the promissory note, in the vast majority of cases, it cannot even produce evidence such as the original promissory note--even from the current note holder to show a basis for MERS to be a plaintiff in these foreclosure suits. On the other end of the spectrum, the borrower had no knowledge of, let alone was a borroer ever a party to any of these post funding agreements through to and including the securitization proces.

Recently, the Supreme Court of Kansas, agreed and dismissed a lawsuit seeking foreclosure relief on the above and several other grounds. The Kansas case was followed shortly by two similar cases out of Ohio and Massachusetts. It should be only a matter of time before the majority or our state and federal courts get on board and force these anto-transparency, clandestine riddled transactions to substantiate who the note holder is, produce the note that is the subject of the case and let the court see the endorsements on the reverse side of the note, most of which are in blank. Once this occurs, the courts will likely look MERS and determine that it has no business "fronting" for all these investor note holders of securitized instruments.

Each assignment afreement of each note is required to be recorded against the property that is the collateral for the loan. None of these assignments are recorded, nor will Mers even give out it's contact information in the mortgage or deed of trust, other than to say it is a Delaware corporation. A really interesting and also shocking discovery is that even the current noteholder is not able to produce a copy ot hte note(s) or pool of notes that it is holding in a way that will identify or not whether the note at issue in a particular case is within that pool

Eliminating the "Straw Man" Shielding Lenders and Investors from Liability

The development of "electronic" mortgages managed by MERS went hand in hand with the "securitization" of mortgage loans -- chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into "financial products" called "collateralized debt obligations" (CDOs), ostensibly insure them against default by wrapping them in derivatives called "credit default swaps," and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of "corporate shield" that protects investors from claims by borrowers concerning predatory lending practices.

Read more at: http://www.huffingtonpost.com/ellen-brown/landmark-decision-promise_b_292333.html

Now linked to Technorati and things to come

Barry Hart — Mon, 05 Oct 2009 07:00:00 GMT

We are now linked to Technorati

Our next post will deal with how the Note Holders and their Servicing Agents are at the core of the loan modification fiasco in the context of the utter failure of these "folks" to get loan modifications completed in much larger numbers and in far less time! What is even worse is that NO ONE is even trying to hold them accountable.