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.
Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
17y
Land Trusts:
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.
Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
17y
Michelle-
My intention wasn't to single you out. Rather I wanted to point out that we investors bring a lot of this upon ourselves and I felt we all could use a dose of reality.
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
17y
I just received my Wells Fargo approval of the HUD-1 and they did NOT include any contingencies. My title company even put a big ole stamp on it that says "Buyer my resell for immediate profit" and it was still approved.
Chicago, IL · Member since 2009 · 1 post · 0 votes
17y
Originally posted by Michelle Kasper:
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?
Thanks,
Michelle
Record the "option" (another doc) against title; a clause in option and in contract that buyer is responsible for paying/clearing liens (option) on title. A consideration fee for release of agreement/option. Clearing of title can be handle prior to closing. Monies/fee is held in escrow and release upon closing/funding. You give a release. Title companies do not require this to go on HUD. Lender just wants the lien cleared. Run this by your atty and see if he is ok with it!
Real Estate Investor · houston, TX · Member since 2008 · 38 posts · 5 votes
17y
That's great news Justin. Scott you must have been right. Maybe this guy was trying to do a simultaneous close and that's why they made him sign that affidavit.
Hey Justin do you buy properties in your own name or with an LLC?
Residential Real Estate Agent · Orange County, CA · Member since 2009 · 289 posts · 95 votes
17y
I know not to buy in my own name (I've heard it a million times) But just curious as to why YOU don't buy in your own names? Is it just personal and asset protection or is there more? Just wondering.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Originally posted by Justin S.:
My title company even put a big ole stamp on it that says "Buyer my resell for immediate profit" and it was still approved.
You got to love the way Justin gets it done. I just did a transactional funding for him and on the HUD1 was a big ole stamp in red stating the very same! Go Justin! Disclosure, disclosure, disclosure.
It is for many reasons Chris, one of which is so you can get transactional funding! As a transactional funder myself, I can not and will not loan to a person, only a business entity (or a land trust).
The other reasons are for your liability protection layer (one of many you should have), and the fact that you are running a business, you should be in a business entity. (more professional) :D