I emailed the mortgage fraud department at Fannie Mae about their exact position on this matter and I'm waiting for a response. The newsletter doesn't say its fraud. It says its an inappropriate property flip.
I'm curious what laws it actually violates if any. If you are honest with all parties involved I don't see how it could be fraud. Obviously Anthony's antics are extreme and unfounded but I'd still like to know exactly what Fannie Mae thinks about it.
Real Estate Investor · Los Angeles, CA · Member since 2009 · 37 posts · 9 votes
17y
I'm sure he got it from the Fannie Mae site or article. They use the word "perpertrator"
They also talk about land trusts. Concealing info from lenders. And the second transaction that would have satisfied the mortgage obligation.
Sure in those situations you're looking at trouble. A 2nd transaction hidden from all that would have covered the loan for the homeowner? I'd expect trouble with a deal like that.
One last thing. Fannie Mae recommends the following for lender in transaction 1:
"Condition approval on disclosure of all contracts pending on the property..."
Satisfy that one. Just tell all lenders, buyers, homeowners, and agents you are buying and selling at a profit.
I emailed the mortgage fraud department at Fannie Mae about their exact position on this matter and I'm waiting for a response. The newsletter doesn't say its fraud. It says its an inappropriate property flip.
I'm curious what laws it actually violates if any. If you are honest with all parties involved I don't see how it could be fraud. Obviously Anthony's antics are extreme and unfounded but I'd still like to know exactly what Fannie Mae thinks about it.
Real Estate Investor · Los Angeles, CA · Member since 2009 · 37 posts · 9 votes
17y
Thanks for the follow up Anthony.
I'm sure we're all interested in the comments from your attorney so we appreciate it.
However, how is the seller of the property hurt unless the 2nd transaction is above the loan amount? We're talking about negative equity. There certainly are benefits for the homeowner when an investor steps in and gets the short sale approved and closed in a timely manner.
And #2 is very easy to handle. And everybody should be handling it before this news. Tell the short sale lender about the 2nd transaction. It's that easy.
If they ask how much you're making. What do you do? You tell them.
Real Estate Consultant · Tampa, FL · Member since 2008 · 1 post · 0 votes
17y
Well I hate to burst anyone's bubble or rain on anyone's parade but the point is that double escrows in CA. involving short sales are vey much achiveable.
The reason I can make this statement is becuase our company is a short sale transactional funding source for short sale investors. We have and continue to funds transactions not only in CA but nationwide.
I might also mention the use of the Land Trust is highly recommended to not only protect the interest of the investor but to also avoid seasoning. By implementing the Land Trust along with the Option Contract makes for a smoother and transparnet transaction.
If your interested in knowing more about our services feel free to contact me via e-mail.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
Mike, thanks for your input. I've sent you a colleague request.
I'm seeing more and more Land Trust being used in Short Sales. I've always been against Land Trusts but have reviewed a few different trust & P/S contracts in their use of Short Sales and must say, while it still carries a muddy water stigma, there does seem to be legitimacy behind the use and the reasoning for using them.
I've been seriously contemplating the use of Land Trusts myself recently but I'm not sure I can't get over the negative stigma that's associated with it.
I'd still like to see what you provide for use Anthony. I have a feeling it will not address those of us that properly disclose.
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
17y
We have business associates in California and we perform back to back closing there all the time. We disclose our purpose for the purchase from the get-go. Never had any problems.
I will be more than happy to answer any type of questions regarding this. Just ask!
Real Estate Investor · Tampa, FL · Member since 2008 · 456 posts · 42 votes
17y
Originally posted by Mike Nicholas:
Well I hate to burst anyone's bubble or rain on anyone's parade but the point is that double escrows in CA. involving short sales are vey much achiveable.
The reason I can make this statement is becuase our company is a short sale transactional funding source for short sale investors. We have and continue to funds transactions not only in CA but nationwide.
I might also mention the use of the Land Trust is highly recommended to not only protect the interest of the investor but to also avoid seasoning. By implementing the Land Trust along with the Option Contract makes for a smoother and transparnet transaction.
If your interested in knowing more about our services feel free to contact me via e-mail.
Have a great weekend!
Yes, and I use a title company as well as transactional funding that has been doing this for many years and still continues the process nationwide, including California.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
Originally posted by H Mann:
If you're buying it with an LLC, then the bank will already know that the property is going to be flipped.
exactly how do you know this?
don't assume the bank knows anything. LLC's are used for many purposes. If my LLC that is owned by SDRP wants to purchase a short sale for a buy/hold, the bank isn't going to know that. If I purchase with a S-corp(which I think is better than a LLC for flipping) it doesn't mean the bank 'will already' know the property is going to be flipped.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
Well I'll be the first to admit I was wrong about Anthony, well kind of. I think he's a little mixed up and it doesn't have to do with the actual double closing but with working with preforeclosures.
Anyone working preforeclosures in California really needs to Google California's Foreclosure Consultant Act. It seems as of July 2009 there are some very strict guidleines in place for working with preforeclosures in California. Not to say that you can't do it but I would highly recommend you get some extremely competent direction from a California attorney BEFORE you do.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
Ya I've read around that a seller has a 5 day grace period when signing a short sale contract and there is some tight laws concerning 'consultants' but not so much as 'equity purchasers'
what was your take on it Ryan? I don't invest in California but it would be interesting to know
Real Estate Investor · Los Angeles, CA · Member since 2009 · 12 posts · 7 votes
17y
see post below
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Brian Wall Real Estate Investor Santa Fe Springs, California
16 Posts
108 Influence
Posted: 08/12/2009 at 10:58PM
0 votes
Hi Nick,
I use the land trust to help avoid the 90 day Title seasoning issues. Basically, after the 5 day foreclosure waiting period, the homeowner puts their property into a land trust, where the homeowner retains 100% beneficial interest in the trust, until such time that the bank issues the approval letter.
I have partnered up with a company that has been doing this for quite a while. They have successfully negotiated over 450 transactions in 2008 and are on track to do over 1000 in 2009.
I am just at the tail end of closing my first deal. Market value = 135k
Approval letter = 85k
As soon as we are ready to resale, I will post deal up here on the site, but really the best buyer would be owner occupied, since it will be priced at about 10% below market value.
I am certainly not an expert on short sales, hence my partnering up.
I am just trying to focus my energies on finding deals, and outsource the negotiations.
Report Abuse
Brian Wall, The Golden Key Realty
[CONTACT INFO REMOVED]
Status: Waiting to get paid on my first Short Sale Flip
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Well as for me...
I have been doing Short-sale Double Close since 2007 but not 450 deals per year. May be 5 deals per year at $50,000 per file.
Just remind your "attorney" that "Not all attornies are created equal".
TIP of the DAY: One thing that I had to do now to close the transaction is to secure an acknowledgement from forclosure lender for the TITLE COMPANY as its requirement ... "...immediate re-sale of the property purchased in the short-sale transaction has no impact on the current approval..."...they all repied "no impact on current short-sale letter approval...or we' don't care...just send us the money ASAP..."
The Country needs people like us to re-cycle the real estate. When we completed the transaction everyone gets paid: the bank, the agent, the tile companies, escrow, Fedex and homeowner gets to avoid foreclosure. Now that is Win Win and Win for everyone.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
The problem is that whether your intention is to consult or to purchase if you say or do certain things to the homeowner you automatically become a foreclosure consultant under the act.
If you tell the homeowner you can stop or delay the foreclosure, you fall under the act. If you talk to the homeowners creditors (I.e. The bank) on their behalf, you fall under the act. If you give them any fiancial advice in how to cure the foreclosure or help their credit, you fall under the act.
And if you fall under the act there are some very specific rules you must follow or you will be civilly AND criminally liable.
It looks very sticky. I personally would not talk to another person in foreclosure in California until I've talked with a very knowledgeable attorney about how to stay safe under the act.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
I have a new phone and I can't seem to get the url. Just google California Foreclosure Consultant Act.
Its California Civil Code Section 2945-2945.11
The sharks already smell blood. I've already seen attorney's advertising for homeowners in foreclosure who have been contacted by anyone.
It has nothing to do with disclosure. If you are working preforeclosures in California you really need to fully understand the implications of the Foreclosure Consultant Act.
Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
17y
Interesting read......
1st: Read the first paragraph and I believe the intent of this legislation is to prevent those who are "scamming" sellers by promising them help and never intended to do anything. For example: We have all read those stories of people accepting advance fees and never actually doing anything.
Do not charge any upfront fees to the sellers and do not promise to save them from foreclosure or save their credit...
2nd: If you approach owners who have not yet had a Lis Pendens filed against them, you will be exempt. See below:
"Residence in foreclosure" and "residential real property in
foreclosure" means residential real property consisting of one- to
four-family dwelling units, one of which the owner occupies as his or
her principal place of residence, and against which there is an
outstanding notice of default, recorded pursuant to Article 1
(commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of
Division 3.
3rd: Follow the guidelines set forth and become a qualified foreclosure consultant.
Since I negotiate for investors in California, I will need to have my attorney take a look into this to see if my company is at risk.
After reading this, I do not think it applies directly with short sales but mostly applies to charging fees for loan modifications and those scammers who are having sellers transfer their interests into the investors names. In my opinion, it is good legislation because anyone who directly charges a seller to do a loan modification or has them do a quit claim should go to jail.