I know there's a lot of threads on Dodd/Frank and Lonnie Deals, However I'd like to hear from anyone who currently does seller financing and what method they're deploying to be compliant.
Ideally, I'd like hear from small investors currently doing these deals.
Thanks in advance,
Dave
Hey everyone,
There have been a ton of posts reported to the Admins in this thread, and I want to address everything at once.
So far, I'm not going to be removing anything. Yes, it's getting heated but it's a good debate - let's just be sure to keep any name-calling out of it. People need to see both sides. But let's be civil or I'll just close the entire thread, as we often need to on these Dodd Frank arguments.
Dodd-Frank is complicated, and as the gentlemen in this debate have shown, open to interpretation since it is so new. I, personally, don't want to be the guy called before the Judge to set the case law, and I doubt you do too. So be careful.
And anyone reading this in the future should know: don't listen to anyone on a Forum at face value. Go talk to a specialized attorney and verify what you need to know.
@Brian Gibbons
Apparently, the forum rules only allow one to post someone else's link and not their own even if there's nothing sold or pitched.
The mod deleted my prior links to non-sales websites.
If you go to Academy dot Virtual Real Estate Investor dot org and scroll to the bottom of the page there's a blog post titled, "Closing With An Attorney Is A Waste Of Time And Money".
In that blog post, there's a link to the Hot Seat Webinar where you can see/hear it live as I forensically audit his lease option agreements and in the subsequent webinar, he does the same for two hours on my contract for deed and methodology.
On the webinar are myself, the real estate attorney, a CPA and professional investor, another professional investor who got owned in court on a lease option deal by the Attorney General and another real estate investor. The purpose was a candid and professional discussion on lease options, disguised sales, and Dodd-Frank compliance and/or avoidance.
So, it's not scripted, nor is it one sided. You'll get to hear everyone's opinion. On some things we agreed, on others we didn't, and there are explanations why so you can draw your own conclusions.
@Bill Gulley
Are the character attacks and insults really necessary because they serve no purpose and benefit no one?
Is no one allowed to proffer experience in these threads other than you?
It's a little disingenuous for you to say I'm lost on anything when you then repeat what I just stated.
Let's try to keep it professional and on topic so we can help people, fair enough?
I'm extremely familiar with laws as they relate to lease options and Dodd-Frank and de facto and disguised sales do fall under Dodd-Frank due to what you mentioned previously regarding.........wait for it......circumvention.
Revenue Ruling 55-540, 4.01 states, in relevant part, “Whether an agreement, which in form is a lease, is in substance a conditional sales contract depends upon the intent of the parties as evidenced by the provisions of the agreement, read in the light of the facts and circumstances existing at the time the agreement was executed.”
To determine whether an arrangement is a lease-option or a sale, the IRS examines all of the facts and circumstances surrounding the transaction. Circumstances that suggest a sale include:
* Portions of the rental payments are specifically applied to equity in the property (think RENT CREDITS)
* Title to the property will transfer to the lessee upon payment of the rental payments (ie. Total payments made actually equal the purchase price)
* The amount paid in rental payments is an excessively large proportion of the total sum required to secure transfer of title to the property.
* The taxpayer can acquire title to the property under a purchase option price that is nominal in relation to the value of the property at the time the option may be exercised.
* Some portion of the rental payments is specifically designated or readily recognized as interest.
* The sum of the rental payments and purchase option approximates the original purchase price plus interest and carrying charges.
* The lease requires the lessee/buyer to make substantial improvements to the property.
So, yes, you can do a lease option that the IRS deems is a disguised sale (which most lease options are, including John Jackson's) and have it fall under Dodd-Frank.
Not opinion. Fact.
I'd suggest you watch the webinar we did because we had a real estate attorney, a CPA who's a bona fide expert on Dodd-Frank and another real estate investor who was taken to the cleaners over a lease option deal.
Obviously, a personality issue here.
That is not what I said, I'm well aware of disguised sales and bogus sales, a lease-option can be accomplished without it being a disguised sale. Finance the option price and you will be under DF, to a consumer.
As to the last point, tenant required to make repairs. In a residential lease, the tenant may not make repairs as that puts you in violation of tax code and leads to fraudulent returns and tax evasion/fraud. That's been covered here. Not a disagreement with you, simply falls into several areas, disguised sales, tax violations and predatory dealing.
Who bona-fide that CPA as a DF expert? The CFPB? A regulatory agency? We used to say an expert was`someone more than 50 miles away from home, now we have to add to that, anyone on the internet. :)
Ultimately, Dodd-Frank is un-Constitutional, communism at its finest and serves no legitimate purpose. Its only purpose is to further institute communistic state totalitarian rule in the U.S. and interfere in commerce.
^^^^
Well said, in addition to it being a ploy to keep overpaid consultants who are in bed with the regulators employed.
ROTFLMAO!
Do you guys hear that at some flag burning party.
The reason Dodd-Frank reached out to seller financed real estate transactions was because of the predatory, cheating, low life, scamming vultures calling themselves "investors" ripping off the public, not all investors, but most doing SF deals. Because they had no clue to what they were doing, or if they did, they were just greedy cons. The public yelled and law markers heard them. Now, we can all suffer for the acts of those others.
Everyone wants to avoid the blame.
Now, if that dang EPA would go do something else, I wouldn't have gotten so much rain here that has killed my flowers and it's my constitutional right to have flowers in my yard!!!! Darn government bunch! :)
No, Dodd Frank and other similar legislation get enacted for the benefit of certain special interest groups who in turn profit from them. It wasn't Joe Q Public crying out for them, it was special interest groups who couldn't stand the idea of small businesses filling a need.
If a certain consultant you often mention was honest, he'd admit that the repeal of Dodd Frank would be his worst nightmare.
All financial laws benefit someone, I agree, but I'm not arguing the reason they did it, laws are usually anchored in the public good more than to a special interest, not saying interests don't play, but the reason is based on the public good to justify them.
Now, can you identify those that benefit? Don't forget, regulators are on a salary, not commission.
Maybe another thread, we are getting off topic too. :)
Is awesome at mobile homes and rent to own.
From my CPA
STRATEGIES TO AVOID RECHARACTERIZATION OF A SALE:
Where the parties want to avoid having the lease/option recharacterized as a sale, the overall planning strategy is to avoid or minimize the above indicators of a deemed sale as follows:
1. The rent should be at or near fair rental value. Breece Veneer & Panel Co., 232 F .2d 319.
Get a written opinion of the rental value from a qualified real estate professional.
2. Keep rent credits toward the option price to a minimum.
Generally, 20% or less is considered reasonable.
3. The option price should be at or near fair market value.
Get a written opinion of the market value from a qualified real estate professional.
Breece Veneer & Panel Co., Ibid.
4. Try not to tie-in substantial lessee improvements with the option exercise.
5. Do not pass legal (or equitable) title to the optionee\lessee\buyer.
6. Demonstrate that you intend to do a lease-option and that you believe the rent and option price to be reasonable. See Benton, 197 F.2d, 745; Lester, 32 TC, 711.
Use arm's length lease-option documents along with the counsel of qualified professionals.
``````````````````````````````
Dodd Frank, TILA-RESPA, SAFE ACT, etc, are not the IRS.
Apples and Oranges.
BP Podcast #70 with Grant Kemp covers Dodd-Frank and owner financing. He has read all 9000 pages of it and uses that info in his business model.
Good Luck.
I don't really care about the request by the OP!!!!
If any freaking person mentions podcast #70, I'm going to ask them to to do some research in the forms; Before you begin talking about how great some freaking podcast is. He violated several federal laws.
CAVEAT LECTOR , let the reader beware! Stupid is becoming the norm in BP forums. And that know nothing could not answer questions aboy credit cards or student debt, falt azz lied about understanding 9,000 pages! Total BS. !!! .
BP Podcast #70 with Grant Kemp covers Dodd-Frank and owner financing. He has read all 9000 pages of it and uses that info in his business model.
Good Luck.
I don't really care about the request by the OP!!!!
If any freaking person mentions podcast #70, I'm going to ask them to to do some research in the forms; Before you begin talking about how great some freaking podcast is. He violated several federal laws.
CAVEAT LECTOR , let the reader beware! Stupid is becoming the norm in BP forums. And that know nothing could not answer questions aboy credit cards or student debt, falt azz lied about understanding 9,000 pages! Total BS. !!! .
*sigh* I'm on vacation with my wife and have neither the time nor desire to get into another cyber war with you over this. The other poster is right that whenever you're involved it devolves into a borderline slanderous set of replies where you seem to feel that whoever is most aggressive and verbose is the victor.
I reply only because I know others will eventually read this thread. Yes, I have read Dodd-frank entirely. Yes, there are only select sections that even remotely apply to us, so the need for reading the rest was more a bragging right than anything. Yes, I literally spend 50-75 hours every week doing nothing but seller financing (both for my own portfolio and as an acting RMLO for other investors.) Yes I have gone through auditing process with the CFPB unscathed (as have all of the other RMLO's I know currently in this business).
Bill is NOT CURRENTLY an auditor and is not currently doing this business to the best of my knowledge.
I have run all of what I do by an entire counsel of lawyers: case lawyers, standard real estate/title attorneys, and Dodd-Frank specialists.
To all future readers, please be aware that whoever yells loudest is not always right. Please take a look at bill's post history to see the manner in which he posts and make your own decisions. Read the laws for yourself or choose whomever you believe to be "in the know" and work with them.
Again, I don't have time to mess with the reply I know bill will have, as I am trying to enjoy a long deserved vacation. If anyone ever has DF questions or owner financing questions, I will be more than happy to address them.
BP Podcast #70 with Grant Kemp covers Dodd-Frank and owner financing. He has read all 9000 pages of it and uses that info in his business model.
Good Luck.
I don't really care about the request by the OP!!!!
If any freaking person mentions podcast #70, I'm going to ask them to to do some research in the forms; Before you begin talking about how great some freaking podcast is. He violated several federal laws.
CAVEAT LECTOR , let the reader beware! Stupid is becoming the norm in BP forums. And that know nothing could not answer questions aboy credit cards or student debt, falt azz lied about understanding 9,000 pages! Total BS. !!! .
*sigh* I'm on vacation with my wife and have neither the time nor desire to get into another cyber war with you over this. The other poster is right that whenever you're involved it devolves into a borderline slanderous set of replies where you seem to feel that whoever is most aggressive and verbose is the victor.
I reply only because I know others will eventually read this thread. Yes, I have read Dodd-frank entirely. Yes, there are only select sections that even remotely apply to us, so the need for reading the rest was more a bragging right than anything. Yes, I literally spend 50-75 hours every week doing nothing but seller financing (both for my own portfolio and as an acting RMLO for other investors.) Yes I have gone through auditing process with the CFPB unscathed (as have all of the other RMLO's I know currently in this business).
Bill is NOT CURRENTLY an auditor and is not currently doing this business to the best of my knowledge.
I have run all of what I do by an entire counsel of lawyers: case lawyers, standard real estate/title attorneys, and Dodd-Frank specialists.
To all future readers, please be aware that whoever yells loudest is not always right. Please take a look at bill's post history to see the manner in which he posts and make your own decisions. Read the laws for yourself or choose whomever you believe to be "in the know" and work with them.
Again, I don't have time to mess with the reply I know bill will have, as I am trying to enjoy a long deserved vacation. If anyone ever has DF questions or owner financing questions, I will be more than happy to address them.
Well said, sir.
Hey everyone,
There have been a ton of posts reported to the Admins in this thread, and I want to address everything at once.
So far, I'm not going to be removing anything. Yes, it's getting heated but it's a good debate - let's just be sure to keep any name-calling out of it. People need to see both sides. But let's be civil or I'll just close the entire thread, as we often need to on these Dodd Frank arguments.
Dodd-Frank is complicated, and as the gentlemen in this debate have shown, open to interpretation since it is so new. I, personally, don't want to be the guy called before the Judge to set the case law, and I doubt you do too. So be careful.
And anyone reading this in the future should know: don't listen to anyone on a Forum at face value. Go talk to a specialized attorney and verify what you need to know.
Just my score card. It says no one has chimed in who is actually doing seller financing of MHs in parks who claims they are DF compliant in this thread. Jason Dillard said he's doing SF as a mater of course of doing business (better have a read of CFPB's view on this) but didn't say he was SFing MHs in parks.
This agrees with my last 1 yrs reading of BP's MH forum and a few linkedin groups. There's folks willing to admit they are still doing Lonnie deals, but mostly they admit they are thumbing their nose at DF, or upon simplest questions they are ignorant of DF's covering of their activities.
My post re Sun Communities is the best option for being a park owner selling off POHs to occupants IMHO. Lonnie dealers have no viable path that I have read of todate other than selling for cash in one lump sum.
This partial solution came to mind: a thought is to arbitrage the lot rent from the park. As a Lonnie dealler you do:
- buy a MH in a park for what ever. Often $2k to $8k (+/-)
- offer to sell for one lump sum. What ever you can get. Say $1k. Ok you are in the hole, but so far DF compliant.
- Mark up the lot rent. If the park is charging you $350/mo, you charge the new home owner $450..
- charge the lot rent premium till the cows come home. Usually 2-4 yrs till some lifes event and the new owner up and MIAs (which happens alot, perhaps with certainty).
- I need help here folks. Is there a tactic that would force the home tile to revert back to you, the lot rent arbitrage landlord if they skip out on paying lot rent? I worry about putting such terms in the lot rent lease with the occupant... (this concept was invented on the spot and has no research)
===
This is the root of it. There is no solid legal solution for the lonnie dealer (seller financing homes at high markup and high interest rate to occupants)!! Lonnie's daughter (or sister) had a conference in the past year on how to legally continue doing Lonnie deals and be DF / CFPB compliant, thus keeping the book and IP alive. Very odd,,, that none of the legal solutions have surfaced???
I hope this is the LAST thread on this topic forever or until Ken h (??) gets a lobbying effort geared up and effects an exemption for MHP owners and who else to SF MHs (again).
Hey everyone,
There have been a ton of posts reported to the Admins in this thread, and I want to address everything at once.
So far, I'm not going to be removing anything. Yes, it's getting heated but it's a good debate - let's just be sure to keep any name-calling out of it. People need to see both sides. But let's be civil or I'll just close the entire thread, as we often need to on these Dodd Frank arguments.
Dodd-Frank is complicated, and as the gentlemen in this debate have shown, open to interpretation since it is so new. I, personally, don't want to be the guy called before the Judge to set the case law, and I doubt you do too. So be careful.
And anyone reading this in the future should know: don't listen to anyone on a Forum at face value. Go talk to a specialized attorney and verify what you need to know.
Calling names never solved anything. I get the frustration with some internet experts who claim to be all knowing spewing "information" that I absolutely know to be incorrect. The temptation is there, but doing so is like engaging in the fruitless pursuit of an untamed ornithoid - it mostly fails.
I would say part of the problem is not that Dodd-Frank is new, but rather that many of the individuals (including many attorneys) involved have little or no training in regulatory law but instead have some knowledge, experience, or expertise in contract law. The differences in that type of law and its practicioners are as great as oncology and radiation oncology are in medicine. Unfortunately, the practice of law is not as well defined as is medicine.
Regulatory attorneys already understand 90% of what is likely to happen under Dodd-Frank and outside the aegis of Dodd-Frank. They understand it, because they understand how regulatory law works. Here are some basic facts:
Regulators, and the courts, hate what they consider "schemes" to avoid being regulated. They know that normally in a court situation that the courts will not follow the letter of the law, but rather the intent of the law. They also know that they can often find other laws to "fill in the gaps". The CFPB in their last private meeting with state Attorney Generals spend a great deal of time teaching and preaching UDAP as a tool. UDAP existed before Dodd-Frank and has been amended so many times through secondary legislation that many attorneys have no real understanding of what can be done with it to chase the unregulated.
The truth is, no attorney, no consultant, and no self-styled expert can know every detail of the laws that affect lending, let alone all the other regulatory issues. The really good attorneys and consultants normally specialize in a particular area which might be quite limited, and either utilize other specialists in their own firm (or that they hire), or refer clients and customers out to others when the problem is outside their area of specialty. While I have a pretty good knowledge of the Gramm–Leach–Bliley Act and how it may, or does, affect our clients and customers, it is not in my area of specialty so when clients and customers need advice in this area, I refer it to one of two others in our consultancy who are focused on it. I'm the consultancy's generalist and strategic planner for clients, not a specialist in legal issues and compliance. I understand enough to help clients solve problems and understand the bigger picture of issues, but only with a considerable amount of input from various specialists.
We retain three different regulatory law firms on top of our own staff for the same reasons. Each law firm has areas of specialty within the regulatory laws that affect chattel lending for manufactured homes, and when we need help, we go to the firm that has the specialized focus in that arena. No one law firm we have found is competent in all the areas we cover. We do not consult on real estate lending for that reason, nor do I spend any time trying to understand it. We send people elsewhere if their problem involves real estate.
Bigger Pockets is a valuable resource for many people, but because of its nature, it also has its own problems:
* The loss of John Hyre as a poster on BP is an example of this. John is, among other things, a very talented tax attorney who many of our clients, large and small, swear by, and who our consultancy has utilized many times.
Here is a suggestion for what it is worth:
If you consider yourself to be knowledgeable and you read a post you cannot agree with, first consider why the poster is putting it up. If they seem to be posters who actually want to do the right thing, communicate privately with them expressing your concerns and explaining your reasons for the concern. If they are legitimate, they will take time to seriously consider what you write. If they are more interested in feeding their ego or in continuing to promote something flawed for money they won't, but at least you have learned which side of the ethical fence they are on.
If they are simply ego driven or just out for the money, try not to attack them but simply post factual and logical responses to their dribble. Sooner or later, they will go away. I did this here with a guy from Texas who was constantly attacking not only me, but a number of others here and even people and organizations who did not post here. He did go away after several months of responses to his attacks that he had no reasonable answer to.
Remember:
BP, like any forum, is no better than the people who populate it. We need to keep it a valuable resource for all.
@Bill Gulley and @Jason Dillard
@Vincent Polisi is a compliance advisor, he is on a D-F task force that includes regulators in various areas. I understand that he is working on a "Lonnie-Deal" type sale that will be compliant.
Bill - Who is "Account Closed"? It sounds like you are describing me. As far as I know, I still have an active account.
Dave, does that mean you want us to repeat ourselves? Read Ken Rishel's posts for mobile homes. Go to his profile page and click on his posts, best way to find them. Ken is in the compliance business for MH dealers. :)
Bill,
I've already read Ken's posts which were rather informative, although not in the most direct way. I'm looking to hear from those currently doing these deals and to get the perspective of someone on the front lines who can give a layman's explanation of what works/doesn't work.
Are you currently doing these deals yourself?
Dave
Dave - What makes you think I am not making loans? While it is true I and my partners sold the bulk of our loan portfolios early in 2013 for $1.05 of face, I still have loans working, and new ones originating in communities I am invested in.
I am curious as to what you mean by my posts being rather informative, although not in the most direct way. If I can improve my communications, I am always open to doing so.
Dave, does that mean you want us to repeat ourselves? Read Ken Rishel's posts for mobile homes. Go to his profile page and click on his posts, best way to find them. Ken is in the compliance business for MH dealers. :)
Bill,
I've already read Ken's posts which were rather informative, although not in the most direct way. I'm looking to hear from those currently doing these deals and to get the perspective of someone on the front lines who can give a layman's explanation of what works/doesn't work.
Are you currently doing these deals yourself?
Dave
Dave - What makes you think I am not making loans? While it is true I and my partners sold the bulk of our loan portfolios early in 2013 for $1.05 of face, I still have loans working, and new ones originating in communities I am invested in.
I am curious as to what you mean by my posts being rather informative, although not in the most direct way. If I can improve my communications, I am always open to doing so.
In a nutshell, most of us on BP are small investors looking for straight to the point answers.
There's also a happy medium between the extremes of free hearsay advice on the Internet and paying thousands of dollars in consulting fees for info that is out there if you talk to the right people.
Just my score card. It says no one has chimed in who is actually doing seller financing of MHs in parks who claims they are DF compliant in this thread. Jason Dillard said he's doing SF as a mater of course of doing business (better have a read of CFPB's view on this) but didn't say he was SFing MHs in parks.
===
This is the root of it. There is no solid legal solution for the lonnie dealer (seller financing homes at high markup and high interest rate to occupants)!! Lonnie's daughter (or sister) had a conference in the past year on how to legally continue doing Lonnie deals and be DF / CFPB compliant, thus keeping the book and IP alive. Very odd,,, that none of the legal solutions have surfaced???
I guess I spend so much of my writing talking about what cannot be done that I forget to write that Rishel Consulting Group has over 500 clients who are doing seller finance legally. I also forget to mention that while I have scaled back, because of my age, I am still financing chattel loans.
There is a "solid legal solution" for Lonnie Dealers. RCG is doing a workshop in Chicago this month for Lonnie Dealers on that subject. Lonnie's daughter is paying to attend, and we are doing it in conjunction with Jackie Lang, who owns the rights to Lonnie's system and books.
@Bill Gulley and @Jason Dillard
@Vincent Polisi is a compliance advisor, he is on a D-F task force that includes regulators in various areas. I understand that he is working on a "Lonnie-Deal" type sale that will be compliant.
Bill - Who is "Account Closed"? It sounds like you are describing me. As far as I know, I still have an active account.
I remember posing that, but I @mentioned you and it worked, then. I have no idea how that is reading that way now.
Maybe David S. quoted me and in that it cam up Account Closed.....no idea.
Glad to see you're here!
I was kinda hoping it was out new guru who left, that's what someone else mentioned to me privately. LOL
Anyway, your thoughts on an active financing operation being 100% compliant, I've never seen one. :)
@Bill Gulley and
Anyway, your thoughts on an active financing operation being 100% compliant, I've never seen one. :)
Regulators are never going to let anyone be 100% compliant, but, with that said, if one works at it, they can get pretty close. The largest fine any of our clients have paid in 2014-2015 so far is under $4,000.00 and that was an operator with $80,000,000 in loans. The majority of them have paid no fines or penalties at all after examination. My lending operation has paid no fines or penalties over the same period.
In full disclosure, we have some customers (there is a difference between customers and clients with us) that have paid fines approaching $50,000.00, with the majority of the fines coming from weaknesses in their anti money laundering compliance. We are aware that 4 of our customers are currently in negotiations with regulators over their lack of a lending policy and procedure system and that the amounts are going to be pretty high.
The point is, if the time and money is spent, you can normally keep the fines and penalties to a manageable level. For me, that is good enough.
No, Dodd Frank and other similar legislation get enacted for the benefit of certain special interest groups who in turn profit from them. It wasn't Joe Q Public crying out for them, it was special interest groups who couldn't stand the idea of small businesses filling a need.
If a certain consultant you often mention was honest, he'd admit that the repeal of Dodd Frank would be his worst nightmare.
This is a clear example of anger on the part of an operator. The backtrail of the SAFE Act and the Dodd-Frank Act is clear. The SAFE Act came to be to cover up POTUS and Congressional Action that led to the meltdown in the first place. The Clintons and their staff revived a program that well-meaning but clueless Jimmy Carter had created, (CRA) and Reagan shuttered was revived by the Clinton team to save their administration from a major recession on their watch. Ironically, Barney Frank was a major cheerleader for the program as well. When it all went to Hell in the meltdown, the politicians worked to bury their part in it by blaming first banks and then mortgage brokers for the problem. Thus, we had the SAFE Act.
The Dodd-Frank Act should have been named the Liz Warren Act. She was the instigator and the brains behind it, which included the CFPB. Of course, she was the first head of the CFPB and hand picked her successor before running for, and winning a US Senate seat. She has no friends among business people, because she hates the idea that anyone would ever make a profit.
The Obama administration and staff are the ones who hate small business. They hate small because small is harder to regulate and tax. The current mayor of Chicago when he was still on the Obama staff once told a meeting of bankers that one of the goals of the Obama administration was to force the consolidation of all banks (through regulation) until there were only 10 very large banks left.
I have no idea which "certain consultant" Dave is referring to but I would personally love to see Dodd-Frank and the SAFE Act disappear. RCG was a very profitable consultancy prior to the passage of all these laws, and took far less investment, and far less time to run. The customers and clients we had then were far happier, and so were we. My personal workload has tripled, but if we were not there to help, there would be many entities in huge trouble right now.
All of that said, I am not a socialist, or even a fiscal liberal. I believe that people should be paid what they are worth and that when I buy something of value, I should expect to pay for it. I get to decide when I give away my knowledge for free and when I expect to be paid.
We subsidize and publish a newsletter monthly that goes out by email for free. We only ask that people that want to subscribe answer a few questions. According to email forwarded to me by Julie Anderson, who is responsible for the newsletter, a certain individual recently refused to answer those questions and then got angry when she told him the newsletter was not available to him. Many of you are subscribed to that newsletter so you know we simply want to know who you are and how to reach you if we chose to.
Sometimes even simple things get complicated.
Well written and quite refined response, thank you.
No, Dodd Frank and other similar legislation get enacted for the benefit of certain special interest groups who in turn profit from them. It wasn't Joe Q Public crying out for them, it was special interest groups who couldn't stand the idea of small businesses filling a need.
If a certain consultant you often mention was honest, he'd admit that the repeal of Dodd Frank would be his worst nightmare.
This is a clear example of anger on the part of an operator. The backtrail of the SAFE Act and the Dodd-Frank Act is clear. The SAFE Act came to be to cover up POTUS and Congressional Action that led to the meltdown in the first place. The Clintons and their staff revived a program that well-meaning but clueless Jimmy Carter had created, (CRA) and Reagan shuttered was revived by the Clinton team to save their administration from a major recession on their watch. Ironically, Barney Frank was a major cheerleader for the program as well. When it all went to Hell in the meltdown, the politicians worked to bury their part in it by blaming first banks and then mortgage brokers for the problem. Thus, we had the SAFE Act.
The Dodd-Frank Act should have been named the Liz Warren Act. She was the instigator and the brains behind it, which included the CFPB. Of course, she was the first head of the CFPB and hand picked her successor before running for, and winning a US Senate seat. She has no friends among business people, because she hates the idea that anyone would ever make a profit.
The Obama administration and staff are the ones who hate small business. They hate small because small is harder to regulate and tax. The current mayor of Chicago when he was still on the Obama staff once told a meeting of bankers that one of the goals of the Obama administration was to force the consolidation of all banks (through regulation) until there were only 10 very large banks left.
I have no idea which "certain consultant" Dave is referring to but I would personally love to see Dodd-Frank and the SAFE Act disappear. RCG was a very profitable consultancy prior to the passage of all these laws, and took far less investment, and far less time to run. The customers and clients we had then were far happier, and so were we. My personal workload has tripled, but if we were not there to help, there would be many entities in huge trouble right now.
All of that said, I am not a socialist, or even a fiscal liberal. I believe that people should be paid what they are worth and that when I buy something of value, I should expect to pay for it. I get to decide when I give away my knowledge for free and when I expect to be paid.
We subsidize and publish a newsletter monthly that goes out by email for free. We only ask that people that want to subscribe answer a few questions. According to email forwarded to me by Julie Anderson, who is responsible for the newsletter, a certain individual recently refused to answer those questions and then got angry when she told him the newsletter was not available to him. Many of you are subscribed to that newsletter so you know we simply want to know who you are and how to reach you if we chose to.
Sometimes even simple things get complicated.
Well, when something magically requires a high priced in person seminar versus a simple podcast or podcast series, or a multi thousand dollar consultation by a select few holding their cards close to their chest- You have beneficiaries of what is in essence a needless regulation.
The bottom line is Lonnie Scruggs was the epitome of the self made salt of the earth millionaire that the elitists who control both parties despise. Dodd Frank is nothing more than an attempt to thwart small business.
Those who benefit from such regulation are as culpable as those who created it, IMO.
Also, with all due respect, As business people, we also like straight to the point answers which was the purpose of this thread, not long winded history lectures or dismissive/subjective arguments.
On a lighter note, I'd like to thank the handful of posters so far who gave constructive input.
I guess we could go back to 1939, even before that, for the reasoning behind financial regulatory policies, let's not. I agree with Ken and small business, in fact, the bigger business gets the more I dislike them......generally. That gets off topic.
Anyone starting a forum thread on BP doesn't "own" that thread. Folks that want to hear only what they want to should probably open their own site, then you could boot those who disagree with you off the site or just hit delete.
The reason is that "financial areas" are more serious concerns than real estate matters, there are more ways of getting burned with federal criminal actions in finance than real estate, not excluding real estate, but finance goes much deeper than the surface scratched by those posting social or political views and opinions.
This site is full of newbies, very impressionable folks. The reason some of us, a very few, butt in on seller financing topics is because of the bad information and implications made that can lead those newbies to disaster.
Even before Dodd-Frank, finance was not simple, RE investors approached matters simply and were often lucky as they dealt in low loan amounts.
Any lender takes on lending risks, not just from nonpayment, but liabilities related to their conduct in many areas. Some of those potential liabilities go away 7 to 10 years after the debt has been fully repaid, that's a long time. Financial fraud really never goes away as the statute of limitations begins upon the discovery of the fraudulent act, your hers could be paying for your screw ups.
I'm not a happy camper either, I can't justify spending $30K to open a compliant brokerage to sell a property using seller finance, and I'm probably the most successful seller financed originators in the country! For several years, more than 90% of my deals closed, that is on par with conventional lending! Nor do I want to set aside a hundred grand to originate and service for others! Why would I do that?
I'm so busy on BP throwing water on fires I don't get much of an opportunity to even get into creative financing! Again, keeping newbies away from forum chatter.
In reality, it doesn't matter what opinions are, there are strict laws enforce and if you don't follow them you can get hammered under the law and/or your borrower can really put it to you.
And, lastly, as to Lonnie Deals, the old methods were pure predatory The SAFE Act was the the first federal mortgage law I ever saw that mentioned the name of a person and their methods. But that doesn't beat out Charles Ponzi for his ponzi schemes in other financial laws. That said, Ken is cleaning up the Lonnie Deal techniques to be compliant and I expect that a pretty good method and product will evolve. Those "rinse and repeat" days are over! :)