Subject to paperwork
Specialist · UT · Member since 2018 · 35 posts · 12 votes
Subject to paperwork
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @Account Closed:
Quote from @Tom Gimer:
@Jay Hinrichs Regardless of what this TC's website says in the disclaimers, the pricing menu arguably reflects the unauthorized practice of law in several places. And yes there is post closing and servicing included plus loan doc prep, etc. I would think some fine tuning of the content is warranted... not trying to be a wet blanket here but just wow.
I get the impression that as @Jay Hinrichs says, having a TC under an active agent is both a good thing and is also under supervision of the agent/broker. That part I'm familiar with.
What is confusing to me, is that on a Subject To you rarely have an agent involved.
This TC seems to be implying they are independent, like maybe a notary.
They make sure that the paperwork is completed properly before going to escrow. Or, in some cases they take care of the paperwork (explaining things to sellers, getting signatures, closing outside of escrow) to free up the investor to look for more deals.
I think a lot of these deals are done without title reports, from what I've seen elsewhere. So the TC acts as the one to convince the seller that it's okay to sell using Subto, and act as the escrow agent. I mean it's so simple, right, talk with the seller to get them to sign a Docusign, it's just a few signatures, no money changing hands, what could go wrong.
Ken think of it as a loan processor that works for a mortgage company.. the processor cant quote rates or do the work of the RMLO but they do all the paper work behind the scenes thats what a good TC in the real estate brokerage does.. its quite legal and very much needed by top producing agents like my wife. TC maybe license or they may not be.. they are independent contractors so no they are NOT under the supervision of an agent.. Just like a loan processor TC have no real direct contact with any clients just with the agent they are supporting.. Its super common even agents that are not top producers use them as the brokerages encourage it.
37 Replies
- Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes2yPace has a lot to hide. Eventually he's going to prison. Hopefully ADX Florence Supermax. Well deserved.
Quote from @Steve K.:
Quote from @Shenell Caldeira:
Hi, I never said or claimed that my E&O would cover Subto Insurance, like a mobile notary, the company I work with they just require us to have it as would a realtor or a life and health agent. Just like a regular TC we donʻt make any provisions or cross over anything either. We work with an affiliate that assists owners that purchase through Subto for insurance. If you have FB, there is a free group that Pace created, Pace does talk about due on sale clause and does speak of his experience and other students will as well. If you want to know more, our team would be happy to get on a consultation.Quote from @Steve K.:
Quote from @Account Closed:
Quote from @Tom Gimer:
@Account Closed Sounds like providing brokerage services to me.
There are third party note servicing companies that specialize in this. They have account setup fees, monthly fees, ACH fees, etc. so it's not cheap but also not as suspect as this very vague arrangement.
Hmmm, interesting. I guess I need to get out more.
Thanks @Tom Gimer:I took it that their responsibility was to get the transaction completed, then they are out of the transaction, I hadn't considered they were receiving and forwarding checks on a monthly basis until the underlying note gets paid off.
There are only a few problems with going that route for creative finance.
1. there are few, willing "Servicers", to take that liability. 2. When the loan changes hands, the "servicing company" loses track and fails to contact you in time to resolve the issue which means the seller starts getting "lates" on their credit and the seller is not going to be happy about that 3. Some servicers actually do go out of business and checks stop getting forwarded. You won't know until your very angry seller calls in a rage that he is in foreclosure.
There are other reasons, when escrow amounts change, when the seller files bankruptcy, when the seller calls the bank to get their name off of the loan. You know, the usual Subto problems that no one will talk about.
In my opinion, Subto is not a "close the deal and forget the seller" transaction, the way a property bought off the MLS using bank financing may be. The buyer needs to know the status and the sentiment of the seller at all times. Things can change quickly.
I use a TC on my transactions of course and they can send contracts out and chase sigs for me etc. but they're careful not to write in additional provisions or cross over into doing an agents job. For a TC to claim that their E&O insurance would cover everything in a subto transaction or to act as a loan servicer post closing, or to provide "subto insurance" seems a little off to me.
I was curious about the subto insurance because there’s a tab for it on the website but it seems like it just goes to a normal landlord insurance company. This may be a case like when Pace commented on here a few months ago about what to do when a loan is called but then ghosted our follow-up questions because his comment didn’t make any sense…
Regarding how to avoid due on sale: Pace tried to explain it on here a few months go on a thread that I started: https://www.biggerpockets.com/forums/921/topics/1139443-due-... but his answer was incorrect, and when several of us pointed that out and asked follow-up questions, he stopped replying. My understanding is anyone who asks hard questions on the facebook group get's politely escorted out of the group... I don't have a dog in the fight, I never use subto as a strategy personally, nor am I against it. I just thought it was odd, and all the posts from subto members on here saying weird stuff is also odd. Something is just off about it IMO.
- Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes2yYep. Everything Pace does is borderline illegal. He will eventually go to prison, Hopefully he will die there.
Quote from @Tom Gimer:
@Jay Hinrichs Regardless of what this TC's website says in the disclaimers, the pricing menu arguably reflects the unauthorized practice of law in several places. And yes there is post closing and servicing included plus loan doc prep, etc. I would think some fine tuning of the content is warranted... not trying to be a wet blanket here but just wow.
- Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes2y
Quote from @Account Closed:
@Tom Gimer: I believe you are an attorney that does escrows, & @Jerry W.: do her comments make any sense?Quote from @Shenell Caldeira:
Quote from @Account Closed:
Quick question, if the Subto falls apart and the student gets sued, are you as the TC going to protect the interests of the student when they get sued?Quote from @Shenell Caldeira:
Our team can help you with paperwork in Subto.
We have a team of Transaction Coordinators at Finish Line TC Services that specialize in creative financing through Paceʻs mentorship. We are here to answer any questions you may have on our services and how we can provide value to you and your business as TCʻs. We handle all 50 states plus Puerto Rico. Feel free to book a consult!
Deal has already been negotiated between the Seller and Buyer, all docs are signed before I get it. We provide a "service". As a TC we are processing the paperwork and being the liaison between the Seller, Buyers, and escrow. Itʻs no different than any real estate transaction.
"Deal has already been negotiated between the Seller and Buyer, all docs are signed before I get it. We provide a "service". As a TC (transaction coordinator) we are processing the paperwork and being the liaison between the Seller, Buyers, and escrow. Itʻs no different than any real estate transaction."
*then* she says:
"Some people donʻt like to deal with the paperwork, they rather concentrate on obtaining more deals, getting to contract thatʻs their focus."
Does that Make any sense?
Does that mean she is doing escrow or is she providing a service that escrow doesn't provide or acting as a real estate agent?
If it's escrow, does that mean there is no licensing required? Very confusing.
If it's a legit piece of real estate practice , I'd be very interested to know.
In 30 years of investing I have not run across this.What they also do not understand is that banks and mortgage companies know who Pace Morby is and are educating their risk managers and underwriters to identify sub to and similar strategies. Banks are under pressure now and with laws like the Corporate Transparency Act they have the government's tools behind them to reduced their riska and start calling notes due so they can sell them or move them off the books.
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