BiggerPockets

I completed the weekend training in the implementation of a NARS Equity Holding Trust. Now, I think I'm a pretty bright person, but I must admit I'm still not clear on how this expensive trust benefits anyone. During the training, a couple of people said, when I expressed my consternation over the complexity of it, "Don't feel bad, I've been doing these deals for two years and I still don't get it! I just send all my paperwork to NARS and they take care of it for me."

Yeah, they take care of it, for a big fat fee!

They claim that the NARS Equity Holding Trust works even if the property is under water. For example, they claim that a prospective buyer who has himself recently emerged from foreclosure, would be willing to buy another under water house to realize (a) the tax benefits of mortgagte interest and (b) possible future appreciation.

Meanwhile, they claim that a seller will be willing to supplement the monthly payment to (a) avoid trashing his credit and (b) participate in possible future appreciation.

To top it all off, they claim that you (who located the seller and the buyer) will be able to skim some gravy from the deal each month because you facilitated the NARS Equity Holding Trust between (a) seller (called the "Seller Beneficiary") and (b) buyer (called the "Resident Beneficiary"). You are called the "Investor Beneficiary."

I said, "You mean a Resident Beneficiary will pay $600,000 (seller's current principal balance) for a house that's worth only $400,000 today to receive the tax benefits of mortgage interest?" Yes, they said. "Yes, an idiot may," I said.

I said, "You mean a Seller Beneficiary will be willing to pay, say, $1,000 per month to avoid a hit to his credit for a short sale?" Yes, they said. "Yes, an idiot may," I said.

The whole thing is very convoluted. Here's an explanation written by Bill Gatten who says, "It doesn't get any clearer than this."

Explanation of NARS Equity Holding Trust