Real Estate Investor · houston, TX · Member since 2008 · 38 posts · 5 votes
I just wanted to give everyone a heads up if you are working with any wells fargo files. Apparently now they are issuing approval letters that Do Not stipulate that you must not resell the property for 30 days but once they approve the final HUD they are attaching an affidavit that everyone (seller, buyer, title agent) must sign stating that the property will not be resold within a 30 day period.
Hope this saves some of you a little bit of a headache.
Everyone talks about land trusts as being very effective. I have used them in short sales in the past and they create as many problems as they solve. Michael hit on one major issue and there are many others.
Lender Restrictions:
Dealing with lender restrictions is really best dealt with an attorney and title company. I like Justin's suggestion in pushing the title company to seek HUD 1 approval ahead of time. That way, you have time for your team members to deal with these illegal restrictions.
Also, it is very clear to me, since Michelle's partner was trying a simultaenous close, that WF, in an attempt to keep this type of transaction from happening, used the restriction at the last minute.
If you are using a simul close, then the HUD 1 will tip off the lender as to what you are doing.
Investors need to realize, if your trying to circumvent the process using simul. closings, land trusts, or other tricks designed to obscure or trick the lenders, ultimately it bites us all in the *** becuase we spend more time and money on attorneys and lost deals then we would have had otherwise saved using the end-buyers funds.
It costs under $5K to pay for transactional funding on most deals. If you cannot negotiate that cost from the lender, then I would recommend droppping the deal (because it is a dog anyway) or hire a negotiator because you suck.
Anyone trying to simul. close should not be surprised about the restrictions. CW got tired of giving up margin to investors double closing and they started the 30 day restriction. Since BOA purchased CW, they are now using this same restriction.
Read the writing on the wall.... This is going to get more and more restrictive until we can no longer profit.
Stop being lazy, inept, or just plain greedy... Instead spend your time being a more effective negotiator and less time and energy trying to get around the restrictions. Chances are, if you negotiate well, you can price in your holding costs and still profit.
Hi guys, I think he was going to end up closing it A to C because he was pressed for time and didn't want to risk losing the deal.
Scott I agree with you. It seems like after they issue the approval letter they should not be able to change the terms like that.
I have asked several title companies and mortgage brokers if we close A to C and the end buyer is getting conventional financing would it be possible to put a "termination of option" fee on the buyers side of the HUD but noone has been able to answer me. Do you guys have any idea if this would work?
Sounds like we need to get alot of people together & stop dealing with banks that try this B.S. & also they really cant do anything anyway. Once we buy, they have no right to tell us anything. Maybe some lawsuits might have some affect? I dunno. I might just change strategies & do something else, just let them eat a bunch of properties.
Just a thought. They accepted an offer. They have to honor the terms on the acceptance letter. I wouldnt sign the affidavit, if they refuse to close, I would turn my attornies loose on them. They only do these things because they get away with it. They just have to be stopped.
My business partner spoke with one title company that has an in house attorney and he said what they are doing is illegal. He said that we did not have to sign the affidavit and he would be willing to fight them on this. With that being said I still don't know if the bank would move forward with the closing or if they would just foreclose on the property.
Bottom line is we all need to figure out a way around this because it seems like the majority of banks are jumping on board.
Can someone explain the difference between a A to B B to C?? closing or A to C closing? I'm very interested in getting involved in with simultaneous closing.
Does your friends contract state anything about an immediate resale?
My contract states that I'm an investor and plan to immediately resale the property. I have the approval letter, so I'm assuming they are okay with it. Just curious if your friends contract discloses that fact.
My business partner spoke with one title company that has an in house attorney and he said what they are doing is illegal. He said that we did not have to sign the affidavit and he would be willing to fight them on this. With that being said I still don't know if the bank would move forward with the closing or if they would just foreclose on the property.
Bottom line is we all need to figure out a way around this because it seems like the majority of banks are jumping on board.
Michelle
I wonder if this would apply to what BofA is doing too?
Everyone talks about land trusts as being very effective. I have used them in short sales in the past and they create as many problems as they solve. Michael hit on one major issue and there are many others.
Lender Restrictions:
Dealing with lender restrictions is really best dealt with an attorney and title company. I like Justin's suggestion in pushing the title company to seek HUD 1 approval ahead of time. That way, you have time for your team members to deal with these illegal restrictions.
Also, it is very clear to me, since Michelle's partner was trying a simultaenous close, that WF, in an attempt to keep this type of transaction from happening, used the restriction at the last minute.
If you are using a simul close, then the HUD 1 will tip off the lender as to what you are doing.
Investors need to realize, if your trying to circumvent the process using simul. closings, land trusts, or other tricks designed to obscure or trick the lenders, ultimately it bites us all in the *** becuase we spend more time and money on attorneys and lost deals then we would have had otherwise saved using the end-buyers funds.
It costs under $5K to pay for transactional funding on most deals. If you cannot negotiate that cost from the lender, then I would recommend droppping the deal (because it is a dog anyway) or hire a negotiator because you suck.
Anyone trying to simul. close should not be surprised about the restrictions. CW got tired of giving up margin to investors double closing and they started the 30 day restriction. Since BOA purchased CW, they are now using this same restriction.
Read the writing on the wall.... This is going to get more and more restrictive until we can no longer profit.
Stop being lazy, inept, or just plain greedy... Instead spend your time being a more effective negotiator and less time and energy trying to get around the restrictions. Chances are, if you negotiate well, you can price in your holding costs and still profit.
Posts like yours are exactly the difference between people like us who actually do short sales and those that are misguided by 'gurus' and the false sense of trickery to success and then wonder why they don't succeed!
Amen brother!
SCott, I second what Nick stated. While using land truists is one of several ways to "circumvent" the no assignment and the no re-sell clauses, you are "hidding" info from the bank and are just asking for future problems.
As Scott stated, make sure you are a good negotiator - step 1 and make sur eyou form enough room in your deal - setp 2 for either holding costs or transactional funding costs.
If anyone needs transactional funding, please contact me. I will have both same day and up to 30 day transactional funding options for all of you on BP Nation.
Yeah, I also agree! Why make the transactions harder than they need to be?! Keeping them simple is the best way. Attempting to trick the Lender does nothing- They have seen all the tricks.
Yeah, I also agree! Why make the transactions harder than they need to be?! Keeping them simple is the best way. Attempting to trick the Lender does nothing- They have seen all the tricks.
and will continue to result in new policies that are making it harder and harder to succeed at short sales which is why I don't think they'll be around so relevantly for to much longer. I'm just hanging on till the end :mrgreen:
Its not shameless, there is a need, everyone is talking about it here on BP and I will provide the answer.
No links, no forum violation, just an answer to a problem for short sale investors. :)
Hi Scott, it actually was not a deal that my business partner and I were working on it was an aquaintance of my business partner. We do not do simultaneous closings we use transactional funding!
Justin I like your idea as well. I am going to talk to my title company and see if they will start submitting the HUD sooner for final approval.