Due On Sale Clause About to Become More Common?

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

We haven't seen that many due on sale clauses being enforced by lenders over the past decade or so. At the same time, we're seeing some gurus selling strategies like subto as if there is no risk of triggering a DOSC. More and more investors are looking to assume low-interest loans rather than deal with reduced cashflow thanks to today's interest rates. It was before my time, but my understanding is that triggering a DOSC was more common in the 80's during a similar rising interest rate environment like we find ourselves in now. Lenders are probably more likely to enforce their right to call the loan if they feel their security is at risk in the hands of an unvetted buyer, or they believe they can make more money if the buyer applies for a new loan. It seems like it is becoming good business for lenders to start enforcing (they may actually also benefit by getting these 2-3% interest loans off their books). Are we about to see an uptick in due on sale clause enforcement? Curious to hear what some lenders and folks who have been around a minute think about this...

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Pace Jordan MorbyPro Member

Investor · Tempe, AZ · Member since 2016 · 20 posts · 50 votes

We have had the due on sale clause called 4 times this month... but knowing your way around it is crucial. Either A: revert to a lease option with the option price being the mortgage balance when the option is executed... or B: Use an executory contract instead of SubTo. Land Contract. Contract for Deed. Agreement for Sale etc. I talk about this on my youtube channel.

Podcast Guest on Show The Beginner's Blueprint to Buying $0 Down Real Estate w/ “Creative Finance”

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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
2y
Quote from @Steve K.:
Quote from @Account Closed:

Quote from @Chris Seveney:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I have not seen an uptick, but I also do not deal in the subto world. I have not heard a lot about it either. Why? Most likely because the residential market is a $12T market and my guess the amount loans sold via UPB on subto is less than $100M a year. I know Ken and Mike and their team are successful at it along with William Tingle, but they are realistic and not making it sound like its a trillion dollar industry like others make it out to be.

I just responded to a "Subto student from the "community" with this

*********************************

His comments; Pace teaches several strategies with due on sale.

My Response:

@Luis Ramos: First, I want to thank you for taking the time to engage the post here.

Now referring to Your Comment:

"then deed back the property to seller and using a title company perform an executory contract. Secondly, if this fails, he offers insurance through Equity Assurance that basically pay offs the underlying note through refinance. If this fails, then perform a land trust strategy"

Please don’t take this as disputing your sincerity. I do believe you are sincere. This is simply addressing common misconceptions Mr. Morby either knows aren’t true and has an agenda to make people think they are true, or he is terribly misinformed. I’m not sure of which.

I know this is a very looonnng post, but it is packed with what anyone in Mr. Morby’s “community” or anyone considering Mr. Morby’s “community” needs to be advised of and consider. This is not an exhaustive list. Just addressing the comments made previously.

The Subto “community” is 4 blind men describing an elephant (look it up) and perpetuating wrong information.

Yes, Subject To is legal when you do it legally and safely.

However, Here Is Reality:

When you deed the property back to the seller, you create all sorts of problems.
But, Take hope, there are solutions. However, Mr. Morby is not presenting those solutions, whatever his motive may be. But, let’s see, he claims 4,000 students at the previous $8,800 fee, so about $35,200,000 he has made on this. That doesn’t go unnoticed by regulators. I think he has since bumped up his fee.

So, here we go:

Deeding back Does Not Stop the Due on Sale. You have already violated the DOS and the bank can choose to foreclose regardless of any further actions you take.
You can not "un-ring the bell". Once the DOS has been violated, it has been violated.
Yes, banks are enforcing the DOS.
It actually “red flags” the account at the bank for further review.
As the bank looks, then sees Two deed transfers in such a short time on one property, then another transfer to a Land Trust and the loan isn’t being paid off, hmm, they say, “something fishy is going on here and it may be illegal”.
Contrary to popular belief, banks aren’t stupid.
No bank is going to risk liability to protect you and ignore that you violated the DOS. That's crazy talk.
You have messed up the bank’s underwriting risk liability on that account. That is not a small thing.
Banks are audited for “suspicious account activities” and a notice gets sent to the FBI. Part of the “Homeland Security thing” You know, drugs, terrorism, etc
You can be sued and criminally charged for up to 7 years after the transaction. How lucky do you feel?
Banks will probably increase their enforcement because Mr. Morby has made it a mockery by saying things like “banks don’t care” , “people who have No Money can buy using Subject To’, “he can buy overleveraged properties”, “he can use gator lenders” for closing and carrying costs”, and he can change the status of the title if he gets caught. That is all sufficient to establish a fact pattern of actions that will have serious consequence for him.
If I was the FBI, I assure you I am not, I would join the Subto “community” and start gathering what I need in order to bring charges and win my case.
Hmmm, I wonder if it would fall under the RICO statutes. Just kidding (sort of).
A lawsuit will cost you $25,000 to $125,000 and a year and a half of your life. With no guarantee of winning. Yes, the seller can sue you. The state can sue you. The Federal govt can sue you. Over what you say? "I haven't done anything wrong". Then why did the DOS get called? Why did you violate those state laws you aren’t even aware of?
Subject To is legal, when done legally. But what I never see addressed are the secondary violations that uneducated Subject To investors inevitably commit. That takes experience to know about. From what I’ve seen, that maturity and experience is sadly lacking in the “community”. Or, do you think regulators are as dumb as a brick?
I go on, The seller has no obligation to take it back
If the seller takes it back, they have no obligation to resell to you, and they might not and there is nothing you can do about it.
The seller likely won’t play that game, they will lose trust in your ability to do Subject To legally and safely and refuse to transfer back.
You may not be able to even find the seller to try to transfer back.
If you do Subject To incorrectly and the DOS gets called, you may not even learn about it until it's too late. Too bad, so sad.
There are additional closing costs that have to be paid
You may trigger an investigation by regulators
Each time you change title it’s likely that taxes are due – explain that to the IRS
You’ve messed up title insurance big time
You have probably invalidated the homeowner’s/landlord insurance.
If any of this confuses you, DO NOT DO SUBJECT TO until you are taught properly

That’s what comes immediately to mind from my 30 years of doing & teaching Subject To

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

In a recent video he said he has discontinued “Equity Assurance”
Has he restarted it?
I believe he has totally walked away from any kind of “Assurance” program. Assurance is NOT Insurance.

Land Trust – he says in his recent video on Due on Sale that he has had 10 Due on sales called recently and his students have had a couple of dozen called, that they had put into Land Trusts
Facts are stubborn things. Land Trusts don’t work.

Any reference to Mr. Morby comes from videos he has recently released on youtube and is publicly available.

I would be curious though, to see if Mr. Morby says something in his groups that isn’t covered here. Can you check with the folks at Discord and get updated information?

Click to enlarge

Very short answer is yes I've had the due on sale clause called on me 10 times

real estate the bank doesn't care if you buy the house subject to

executory contract becasue it gets rid of the due on sale clause altogether

20,000 of those members are actual trained students of mine

Thank you Ken, for laying it all out. Here I was beginning to think I was the crazy one.
When you said you were going to address those issues, I had no idea you meant in detail like that. Lol Great write up!
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @David M.:

@V.G Jason Yeah, that's probably a big clue that something is wrong. But, I feel lots of these video influencers basically draw a "cult-like" following, for lack of better term.
Also, how was the $100m market size determined? Sorry if it was in this thread, with all the replies its too much to scroll through. If its by the loan size of the loans being affected by subj-to then, its not even what people are really making, at least in the near term. In subj-to people are "saving/making" money from the interest differential in using the old loan.
Anyway, i guess there are multiple ways to consider it. But, it seems people have paid more money to him than whats been "saved" using this technique...

There is a very good argument here that they are saving $ on the interest rate BUT they are overpaying for the property. What people have never experienced who are doing this is what is gonna happen when prices drop by 20%. Most who follow this strategy are not financially stable and will have ZERO exit.
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Steve K.
OP
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
Quote from @Chris Seveney:

Quote from @David M.:

@V.G Jason Yeah, that's probably a big clue that something is wrong. But, I feel lots of these video influencers basically draw a "cult-like" following, for lack of better term.
Also, how was the $100m market size determined? Sorry if it was in this thread, with all the replies its too much to scroll through. If its by the loan size of the loans being affected by subj-to then, its not even what people are really making, at least in the near term. In subj-to people are "saving/making" money from the interest differential in using the old loan.
Anyway, i guess there are multiple ways to consider it. But, it seems people have paid more money to him than whats been "saved" using this technique...

There is a very good argument here that they are saving $ on the interest rate BUT they are overpaying for the property. What people have never experienced who are doing this is what is gonna happen when prices drop by 20%. Most who follow this strategy are not financially stable and will have ZERO exit.
Yeah if the rent stops coming in, and they’re underwater on the property, will they just keep making the payments? Probably not then the seller’s credit gets wrecked for 7 years and it’s a circular firing squad situation with no winners. Always best to consider the worst case scenario and make sure the benefits are worth the risks.
2 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
2y
Quote from @James Hamling:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I can't speak to the #'s of DOSC for SubTo, which I see as ticking time-bombs and am NOT a fan of. But to my C4D's, the instrument I use to LEGALLY effect the exact same outcome as SubTo, I have had a grand total of 0 DOSC called, ever.
I simply don't understand the point of SubTo when there is a many generations old existing legal instrument readily available for use.

Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA
0 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
2y
Quote from @Account Closed:
Quote from @Alan F.:

Quote from @James Hamling:
Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

No problem. The whole point of this post is to answer questions like yours. Good question by the way.

In a Subject To, it isn't the seller making the payments. The seller is out of the picture.

The real question is what happens if the buyer stops making the payments: The property goes to foreclosure and the seller's credit gets trashed. The seller then can sue YOU!. You can also be referred to the State Attorney General for fraud. Don't miss any payments.

Your question: "Suggestions on learning more about contract for deed? TIA" \
That is an Executory Contract

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.
Thanks, I got the impression there was a difference between contract for deed and subject to.
1 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
2y
Quote from @Account Closed:
Quote from @Alan F.:

Quote from @Account Closed:

Quote from @Alan F.:

Quote from @James Hamling:
Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

No problem. The whole point of this post is to answer questions like yours. Good question by the way.

In a Subject To, it isn't the seller making the payments. The seller is out of the picture.

The real question is what happens if the buyer stops making the payments: The property goes to foreclosure and the seller's credit gets trashed. The seller then can sue YOU!. You can also be referred to the State Attorney General for fraud. Don't miss any payments.

Your question: "Suggestions on learning more about contract for deed? TIA" \
That is an Executory Contract

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

Thanks, I got the impression there was a difference between contract for deed and subject to.
There is a big difference between them.

The key element is :"the intent of which is the transfer of title"
in law, the intent can be the determining factor, it doesn't have to actually occur or be done in a specific manner.

You can speed because you have your foot down too hard on the pedal or you can speed because you are going down hill. You're still speeding.
Okay, now I'm more confused.
0 Reply
Steve K.
OP
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
Quote from @Alan F.:
Quote from @Account Closed:

Quote from @Alan F.:

Quote from @James Hamling:
Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

No problem. The whole point of this post is to answer questions like yours. Good question by the way.

In a Subject To, it isn't the seller making the payments. The seller is out of the picture.

The real question is what happens if the buyer stops making the payments: The property goes to foreclosure and the seller's credit gets trashed. The seller then can sue YOU!. You can also be referred to the State Attorney General for fraud. Don't miss any payments.

Your question: "Suggestions on learning more about contract for deed? TIA" \
That is an Executory Contract

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

Thanks, I got the impression there was a difference between contract for deed and subject to.
Here's the difference (sorry if I'm being pedantic here, apologies if you already know all of this):
Sub to is when the buyer takes title and starts paying the existing mortgage (but doesn't assume the mortgage, it stays in the seller's name). Sometimes a down payment is made to the seller, such as for the equity they have in the property if any. Often the buyer also needs to bring the loan current by catching up on the seller's late payments and any late fees to the bank (arrears).

Contract for deed (a type of an executory contract along with lease-purchase, lease-option, and land contract) is when the seller keeps title and takes installment payments from the buyer, who takes title only after all those installment payments have been made. It's best used when there is no mortgage, but in cases when there is, the buyer may take over those mortgage payments (again, not assuming the loan because it stays in the seller's name).
The big difference is that in sub2, the buyer takes title. With C4D, the buyer does not get title (they get a contract to take title once all the payments are made). This is one of the reasons why falling back on a contract for deed in the event of a loan being called in a sub to transaction is not considered a great alternative. The buyer has to give title back to the seller. That's more risky for the buyer because they don't own the property. A bankruptcy, missed payment, judgement against the seller that attaches to the property etc. causes a big problem for them both, not just the seller like with sub to. Plus it creates a taxable event and gives the bank the right to enforce the due on sale clause if they want to, because title changes hands again.
Does that answer your question?
1 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
2y
Quote from @Steve K.:
Quote from @Alan F.:

Quote from @Account Closed:

Quote from @Alan F.:

Quote from @James Hamling:
Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

No problem. The whole point of this post is to answer questions like yours. Good question by the way.

In a Subject To, it isn't the seller making the payments. The seller is out of the picture.

The real question is what happens if the buyer stops making the payments: The property goes to foreclosure and the seller's credit gets trashed. The seller then can sue YOU!. You can also be referred to the State Attorney General for fraud. Don't miss any payments.

Your question: "Suggestions on learning more about contract for deed? TIA" \
That is an Executory Contract

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

Thanks, I got the impression there was a difference between contract for deed and subject to.

Here's the difference (sorry if I'm being pedantic here, apologies if you already know all of this):
Sub to is when the buyer takes title and starts paying the existing mortgage (but doesn't assume the mortgage, it stays in the seller's name). Sometimes a down payment is made to the seller, such as for the equity they have in the property if any. Often the buyer also needs to bring the loan current by catching up on the seller's late payments and any late fees to the bank (arrears).

Contract for deed (a type of an executory contract along with lease-purchase, lease-option, and land contract) is when the seller keeps title and takes installment payments from the buyer, who takes title only after all those installment payments have been made. It's best used when there is no mortgage, but in cases when there is, the buyer may take over those mortgage payments (again, not assuming the loan because it stays in the seller's name).
The big difference is that in sub2, the buyer takes title. With C4D, the buyer does not get title (they get a contract to take title once all the payments are made). This is one of the reasons why falling back on a contract for deed in the event of a loan being called in a sub to transaction is not considered a great alternative. The buyer has to give title back to the seller. That's more risky for the buyer because they don't own the property. A bankruptcy, missed payment, judgement against the seller that attaches to the property etc. causes a big problem for them both, not just the seller like with sub to. Plus it creates a taxable event and gives the bank the right to enforce the due on sale clause if they want to, because title changes hands again.
Does that answer your question?
Yes! Thanks Steve that was a great explanation, many thanks:)
1 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
2y
Quote from @Account Closed:
Quote from @Chris Seveney:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I have not seen an uptick, but I also do not deal in the subto world. I have not heard a lot about it either. Why? Most likely because the residential market is a $12T market and my guess the amount loans sold via UPB on subto is less than $100M a year. I know Ken and Mike and their team are successful at it along with William Tingle, but they are realistic and not making it sound like its a trillion dollar industry like others make it out to be.

I just responded to a "Subto student from the "community" with this

*********************************

His comments; Pace teaches several strategies with due on sale.

My Response:

@Luis Ramos: First, I want to thank you for taking the time to engage the post here.

Now referring to Your Comment:

"then deed back the property to seller and using a title company perform an executory contract. Secondly, if this fails, he offers insurance through Equity Assurance that basically pay offs the underlying note through refinance. If this fails, then perform a land trust strategy"

Please don’t take this as disputing your sincerity. I do believe you are sincere. This is simply addressing common misconceptions Mr. Morby either knows aren’t true and has an agenda to make people think they are true, or he is terribly misinformed. I’m not sure of which.

I know this is a very looonnng post, but it is packed with what anyone in Mr. Morby’s “community” or anyone considering Mr. Morby’s “community” needs to be advised of and consider. This is not an exhaustive list. Just addressing the comments made previously.

The Subto “community” is 4 blind men describing an elephant (look it up) and perpetuating wrong information.

Yes, Subject To is legal when you do it legally and safely.

However, Here Is Reality:

When you deed the property back to the seller, you create all sorts of problems.
But, Take hope, there are solutions. However, Mr. Morby is not presenting those solutions, whatever his motive may be. But, let’s see, he claims 4,000 students at the previous $8,800 fee, so about $35,200,000 he has made on this. That doesn’t go unnoticed by regulators. I think he has since bumped up his fee.

So, here we go:

Deeding back Does Not Stop the Due on Sale. You have already violated the DOS and the bank can choose to foreclose regardless of any further actions you take.
You can not "un-ring the bell". Once the DOS has been violated, it has been violated.
Yes, banks are enforcing the DOS.
It actually “red flags” the account at the bank for further review.
As the bank looks, then sees Two deed transfers in such a short time on one property, then another transfer to a Land Trust and the loan isn’t being paid off, hmm, they say, “something fishy is going on here and it may be illegal”.
Contrary to popular belief, banks aren’t stupid.
No bank is going to risk liability to protect you and ignore that you violated the DOS. That's crazy talk.
You have messed up the bank’s underwriting risk liability on that account. That is not a small thing.
Banks are audited for “suspicious account activities” and a notice gets sent to the FBI. Part of the “Homeland Security thing” You know, drugs, terrorism, etc
You can be sued and criminally charged for up to 7 years after the transaction. How lucky do you feel?
Banks will probably increase their enforcement because Mr. Morby has made it a mockery by saying things like “banks don’t care” , “people who have No Money can buy using Subject To’, “he can buy overleveraged properties”, “he can use gator lenders” for closing and carrying costs”, and he can change the status of the title if he gets caught. That is all sufficient to establish a fact pattern of actions that will have serious consequence for him.
If I was the FBI, I assure you I am not, I would join the Subto “community” and start gathering what I need in order to bring charges and win my case.
Hmmm, I wonder if it would fall under the RICO statutes. Just kidding (sort of).
A lawsuit will cost you $25,000 to $125,000 and a year and a half of your life. With no guarantee of winning. Yes, the seller can sue you. The state can sue you. The Federal govt can sue you. Over what you say? "I haven't done anything wrong". Then why did the DOS get called? Why did you violate those state laws you aren’t even aware of?
Subject To is legal, when done legally. But what I never see addressed are the secondary violations that uneducated Subject To investors inevitably commit. That takes experience to know about. From what I’ve seen, that maturity and experience is sadly lacking in the “community”. Or, do you think regulators are as dumb as a brick?
I go on, The seller has no obligation to take it back
If the seller takes it back, they have no obligation to resell to you, and they might not and there is nothing you can do about it.
The seller likely won’t play that game, they will lose trust in your ability to do Subject To legally and safely and refuse to transfer back.
You may not be able to even find the seller to try to transfer back.
If you do Subject To incorrectly and the DOS gets called, you may not even learn about it until it's too late. Too bad, so sad.
There are additional closing costs that have to be paid
You may trigger an investigation by regulators
Each time you change title it’s likely that taxes are due – explain that to the IRS
You’ve messed up title insurance big time
You have probably invalidated the homeowner’s/landlord insurance.
If any of this confuses you, DO NOT DO SUBJECT TO until you are taught properly

That’s what comes immediately to mind from my 30 years of doing & teaching Subject To

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

In a recent video he said he has discontinued “Equity Assurance”
Has he restarted it?
I believe he has totally walked away from any kind of “Assurance” program. Assurance is NOT Insurance.

Land Trust – he says in his recent video on Due on Sale that he has had 10 Due on sales called recently and his students have had a couple of dozen called, that they had put into Land Trusts
Facts are stubborn things. Land Trusts don’t work.

Any reference to Mr. Morby comes from videos he has recently released on youtube and is publicly available.

I would be curious though, to see if Mr. Morby says something in his groups that isn’t covered here. Can you check with the folks at Discord and get updated information?

Click to enlarge

Very short answer is yes I've had the due on sale clause called on me 10 times

real estate the bank doesn't care if you buy the house subject to

executory contract becasue it gets rid of the due on sale clause altogether

20,000 of those members are actual trained students of mine
This may be the most impressive BiggerPockets forum post I've seen thus far
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
2y
Quote from @Account Closed:

Quote from @Andrew Syrios:

Quote from @Account Closed:

Quote from @Chris Seveney:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.

This may be the most impressive BiggerPockets forum post I've seen thus far

@Andrew Syrios: Heheheheheheheheh, you crack me up. Thanks for the positive feedback though. ;-)

Sure thing, keep up the good posts lol
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2 Reply
Jay King
Member since 2024 · 26 posts · 6 votes
2y
Its only a matter of time before the do. Marth 11th 2024 new laws that effect banking and deposits go into effect. I expect these loopholes to disappear. Better for the bank to Foreclose right off the neg am and cash out at auction then suffer through 30 yrs of 2-3% while they are paying 5-6% to borrow.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Jay King:

Its only a matter of time before the do. Marth 11th 2024 new laws that effect banking and deposits go into effect. I expect these loopholes to disappear. Better for the bank to Foreclose right off the neg am and cash out at auction then suffer through 30 yrs of 2-3% while they are paying 5-6% to borrow.

Lets keep in mind that borrowers signed loan documents IE a mortgage and the Due on sale clause is buried in the Events of Default of title section of the mortgage/Deed of Trust.. And Alienation of title is a Event of default. there are numerous events of default.. Non pay of prop tax's non pay of insurance Waste, etc. Once the docs are signed you cant just change the terms without both parties agreeing.. And one would have to get with the companies that produce these debt instruments to rewrite them.. most banks use the same providers for their legal docs.

Along with service rs hold the paper not banks of course there are portfolio loans but for All those government type owner occ loans those loans are all gone to investor/service rs Mers etc. they make money servicing not originating new loans. And with loan volume way down they start getting a bunch of payoffs they wont have any place to put this money. Or a % of it.

For those reasons I see it quite remote that any state could come up with legislation to stop a sub 2 transaction or automatically call it.. there is already a vehicle in place to call the loans.. its up to the holder of the note to enforce it if they wish.. They have the right but not the obligation to do so it already exists.

@Tom Gimer Tom whats your take on this ?

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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Jay King Almost all loans are sold off or resecuritized. Only those few true "portfolio" loans are held on the bank's book. So, no point for the "bank," who is only the servicer (and making fees as such), to try to call the Note. The "securitized noteholder" has no reason either since it just reduces their return. With the way the bond market is structured, lots of the costs structures are effectively "baked in."
1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Jay King:

Its only a matter of time before the do. Marth 11th 2024 new laws that effect banking and deposits go into effect. I expect these loopholes to disappear. Better for the bank to Foreclose right off the neg am and cash out at auction then suffer through 30 yrs of 2-3% while they are paying 5-6% to borrow.

Lets keep in mind that borrowers signed loan documents IE a mortgage and the Due on sale clause is buried in the Events of Default of title section of the mortgage/Deed of Trust.. And Alienation of title is a Event of default. there are numerous events of default.. Non pay of prop tax's non pay of insurance Waste, etc. Once the docs are signed you cant just change the terms without both parties agreeing.. And one would have to get with the companies that produce these debt instruments to rewrite them.. most banks use the same providers for their legal docs.

Along with service rs hold the paper not banks of course there are portfolio loans but for All those government type owner occ loans those loans are all gone to investor/service rs Mers etc. they make money servicing not originating new loans. And with loan volume way down they start getting a bunch of payoffs they wont have any place to put this money. Or a % of it.

For those reasons I see it quite remote that any state could come up with legislation to stop a sub 2 transaction or automatically call it.. there is already a vehicle in place to call the loans.. its up to the holder of the note to enforce it if they wish.. They have the right but not the obligation to do so it already exists.

@Tom Gimer Tom whats your take on this ?

Jay
As usual I agree with you. The only way I can see a significant uptick is if there are more defaults on these loans. Then the lender can use that vs. a contested foreclosure on payments to call the loan.
Also I would not be surprised with all the subto going aruond, its like land contracts several years ago. They were the hot topic and states stepped in and started regulating them. Where I see states stepping in on sub2 is the wrap portion, as the person/llc is originating the loan for business purposes which states have some crafty language in there about having min. number of loans you can seller finance but that is not the case if "you are in the business" is language that the states could crack down on investors originating loans. Highly unlikely as reality is sub2 is not as common as people think it is. But the gurus will tell you otherwise.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Chris Seveney:

Quote from @Jay Hinrichs:

Quote from @Jay King:

Its only a matter of time before the do. Marth 11th 2024 new laws that effect banking and deposits go into effect. I expect these loopholes to disappear. Better for the bank to Foreclose right off the neg am and cash out at auction then suffer through 30 yrs of 2-3% while they are paying 5-6% to borrow.

Lets keep in mind that borrowers signed loan documents IE a mortgage and the Due on sale clause is buried in the Events of Default of title section of the mortgage/Deed of Trust.. And Alienation of title is a Event of default. there are numerous events of default.. Non pay of prop tax's non pay of insurance Waste, etc. Once the docs are signed you cant just change the terms without both parties agreeing.. And one would have to get with the companies that produce these debt instruments to rewrite them.. most banks use the same providers for their legal docs.

Along with service rs hold the paper not banks of course there are portfolio loans but for All those government type owner occ loans those loans are all gone to investor/service rs Mers etc. they make money servicing not originating new loans. And with loan volume way down they start getting a bunch of payoffs they wont have any place to put this money. Or a % of it.

For those reasons I see it quite remote that any state could come up with legislation to stop a sub 2 transaction or automatically call it.. there is already a vehicle in place to call the loans.. its up to the holder of the note to enforce it if they wish.. They have the right but not the obligation to do so it already exists.

@Tom Gimer Tom whats your take on this ?

Jay
As usual I agree with you. The only way I can see a significant uptick is if there are more defaults on these loans. Then the lender can use that vs. a contested foreclosure on payments to call the loan.
Also I would not be surprised with all the subto going aruond, its like land contracts several years ago. They were the hot topic and states stepped in and started regulating them. Where I see states stepping in on sub2 is the wrap portion, as the person/llc is originating the loan for business purposes which states have some crafty language in there about having min. number of loans you can seller finance but that is not the case if "you are in the business" is language that the states could crack down on investors originating loans. Highly unlikely as reality is sub2 is not as common as people think it is. But the gurus will tell you otherwise.

I agree with you about the amount of sub 2 deals out there that make any kind of sense I get the feeling investor just think these things are out there as low hanging fruit to be plucked.. when nothing is further from the truth at least deals that would make sense to me and you .. of course there are always suckers that think over paying or paying full retail just to do a sub 2 is some great move. :) but its like any paid training the reality of deal flow is greatly glossed over. I mean I did it with a team of 6 for about 4 to 5 years and we managed 100 deals or so.. So you can imagine someone on their own.. can they scare up a deal sure.. but this is by no means open seasons easy to do.
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
@Jay HinrichsIf a law is passed that has the effect of reforming existing contracts, there is a fairly detailed analysis/framework for determining whether it would be constitutional under the contracts clause. Recently this came up in the context of COVID rent moratoriums, obviously a major public issue.

I just don't see it happening in the context of subto. What would be the "significant and legitimate public purpose" for the government getting involved in what seems to be a tiny percentage of transactions in an already heavily-regulated industry? And if there is a significant public purpose (doubtful) what would the new law do, require an immediate foreclosure? No chance. Criminalize a financial decision? Nope. It's just not going to happen, IMO.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Tom Gimer:

@Jay HinrichsIf a law is passed that has the effect of reforming existing contracts, there is a fairly detailed analysis/framework for determining whether it would be constitutional under the contracts clause. Recently this came up in the context of COVID rent moratoriums, obviously a major public issue.
I just don't see it happening in the context of subto and millions of existing loan agreements. What would be the "significant and legitimate public purpose" for the government getting involved in what seems to be a tiny percentage of transactions in an already heavily-regulated industry? And if there is a significant public purpose (doubtful) what would the new law do, require an immediate foreclosure? No chance. Criminalize a financial decision? Nope. It's just not going to happen, IMO.

Agreed 100% Lender remedy to call the loans already exists end of story in my mind.
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James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
2y
Quote from @Alan F.:
Quote from @Account Closed:

Quote from @Alan F.:

Quote from @James Hamling:
Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

No problem. The whole point of this post is to answer questions like yours. Good question by the way.

In a Subject To, it isn't the seller making the payments. The seller is out of the picture.

The real question is what happens if the buyer stops making the payments: The property goes to foreclosure and the seller's credit gets trashed. The seller then can sue YOU!. You can also be referred to the State Attorney General for fraud. Don't miss any payments.

Your question: "Suggestions on learning more about contract for deed? TIA" \
That is an Executory Contract

Executory Contracts by definition violate the same Due on Sale that just got called
Here is the actual wording of the Due on sale clause

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

Thanks, I got the impression there was a difference between contract for deed and subject to.
There is. With one, most often when asked the lender will say it's a-ok as long as have full closing, and all legal doc's legal persons/actions involved. And the other the bank generally says "wtf, r u kidding us".
1 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
2y
Quote from @Alan F.:

Quote from @James Hamling:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I can't speak to the #'s of DOSC for SubTo, which I see as ticking time-bombs and am NOT a fan of. But to my C4D's, the instrument I use to LEGALLY effect the exact same outcome as SubTo, I have had a grand total of 0 DOSC called, ever.
I simply don't understand the point of SubTo when there is a many generations old existing legal instrument readily available for use.

Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

One can walk away, or file legal actions. From there stands a host of options one could take.
But if seller was in such financial straights to have any risk of doing such, I wouldn't recommend getting into a C4D, there is other mechanisms of potential. namely, assuming the mortgage.
1 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
2y
Quote from @James Hamling:

Quote from @Alan F.:

Quote from @James Hamling:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I can't speak to the #'s of DOSC for SubTo, which I see as ticking time-bombs and am NOT a fan of. But to my C4D's, the instrument I use to LEGALLY effect the exact same outcome as SubTo, I have had a grand total of 0 DOSC called, ever.
I simply don't understand the point of SubTo when there is a many generations old existing legal instrument readily available for use.

Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

One can walk away, or file legal actions. From there stands a host of options one could take.
But if seller was in such financial straights to have any risk of doing such, I wouldn't recommend getting into a C4D, there is other mechanisms of potential. namely, assuming the mortgage.

Or, there is the even easier MLO direction. Master Lease with Option.
3 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
Quote from @James Hamling:

Quote from @James Hamling:

Quote from @Alan F.:

Quote from @James Hamling:

Quote from @Steve K.:

Reviving this old thread... Have we seen an uptick in DOSC six months later?
Pace said he had 4 in one month earlier in this thread and in this video from a few months ago he says he's had 10 now. Later in the video he says his students have had 12: https://www.google.com/search?q=pace+morby+due+on+sale+claus...

So that's a big increase considering he said he had seen zero previously among himself or his students. He also says that he's using an executory contract (or land contract in Texas) to get around them and has never lost a house.

He does not mention any downside to reverting to an executory contract/ lease option/ land contract.
My understanding is that although it can work, these types of legal agreements have big downsides compared to sub to. For example unlike sub to, in an executory or land contract the seller stays in title which means all the risks are there for them getting liens and having those attach to the property or other typical title problems, plus having to pay closing costs and having a new higher rate when you need to eventually exercise the option. That's not exactly a good alternative to sub to.
Also, even if it's true that is has been working to avoid the DOSC so far, my understanding is that any "outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests" can trigger the DOSC (quoting the bank definition of transfer or sale), meaning that banks could still call these loans due despite the executory contract/land contract if they so choose.

Is anyone else seeing an uptick in DOSC being called besides Pace and his students?

@Account Closed @Tom Gimer @Chris Seveney @James Hamling @Jay Hinrichs

I can't speak to the #'s of DOSC for SubTo, which I see as ticking time-bombs and am NOT a fan of. But to my C4D's, the instrument I use to LEGALLY effect the exact same outcome as SubTo, I have had a grand total of 0 DOSC called, ever.
I simply don't understand the point of SubTo when there is a many generations old existing legal instrument readily available for use.

Pardon my ignorance, what happens if the seller stops making their mortgage payments? Suggestions on learning more about contract for deed? TIA

One can walk away, or file legal actions. From there stands a host of options one could take.
But if seller was in such financial straights to have any risk of doing such, I wouldn't recommend getting into a C4D, there is other mechanisms of potential. namely, assuming the mortgage.

Or, there is the even easier MLO direction. Master Lease with Option.

CFD MLO — neither prevent attachment when the seller has issues.
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Steve K.
OP
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
I don't have a lot of confidence that those numbers are true (10 DOSC for him, a few dozen for his students), considering the source. It could still be zero DOSC for him and he's only saying it's 10 plus these other dozen or two dozen he's helping students with, so he can do a video about how he "gets around them", letting everyone know he's still the self-proclaimed "King of Subto" lol. For me, once I see someone getting caught up in their own contradictions, it's unclear from that point forward whether or not I should believe anything they say. That's the problem with lying, right?
2 Reply
Steve K.
OP
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
Quote from @Account Closed:

Quote from @Steve K.:
I don't have a lot of confidence that those numbers are true (10 DOSC for him, a few dozen for his students), considering the source. It could still be zero DOSC for him and he's only saying it's 10 plus these other dozen or two dozen he's helping students with, so he can do a video about how he "gets around them", letting everyone know he's still the self-proclaimed "King of Subto" lol. For me, once I see someone getting caught up in their own contradictions, it's unclear from that point forward whether or not I should believe anything they say. That's the problem with lying, right?
Yeah, it's tough to believe anything he says. Buyer beware.

Just watched a video where he says “People know me for the phrase “buyers are liars and sellers are worse”” and he’s printing shirts that say that... For one, that phrase has been around since before he was born. Secondly it’s not a nice phrase. Sure there’s some truth to it and you hear a lot of people say it, but it’s pejorative and negative. Not a great look for someone mentoring others IMO. Seems like maybe he uses the fact that buyers and sellers sometimes lie as justification to set the bar super low for himself when it comes to telling the truth? “If everyone else is lying, what’s the big deal” kind of thing. Slippery slope if you ask me, and dangerous if one wants to avoid courtrooms. I encourage those I work with to deal honestly. Hopefully his students are better, I don’t like the idea of thousands of people entering the industry trying to find sellers willing to sell via subto who all think it’s okay to bend the truth, especially with transactions like subto that are complicated and require a lot of trust on behalf of the seller (that the buyer will do what they say and keep making the payments and not wreck the seller’s credit potentially affecting their ability to have a place to live in the future because you can’t even rent an apartment with bad credit). Lawyer’s wet dream.
2 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
2y
Quote from @Steve K.:

Quote from @Account Closed:

Quote from @Steve K.:
I don't have a lot of confidence that those numbers are true (10 DOSC for him, a few dozen for his students), considering the source. It could still be zero DOSC for him and he's only saying it's 10 plus these other dozen or two dozen he's helping students with, so he can do a video about how he "gets around them", letting everyone know he's still the self-proclaimed "King of Subto" lol. For me, once I see someone getting caught up in their own contradictions, it's unclear from that point forward whether or not I should believe anything they say. That's the problem with lying, right?
Yeah, it's tough to believe anything he says. Buyer beware.

Just watched a video where he says “People know me for the phrase “buyers are liars and sellers are worse”” and he’s printing shirts that say that... For one, that phrase has been around since before he was born. Secondly it’s not a nice phrase. Sure there’s some truth to it and you hear a lot of people say it, but it’s pejorative and negative. Not a great look for someone mentoring others IMO. Seems like maybe he uses the fact that buyers and sellers sometimes lie as justification to set the bar super low for himself when it comes to telling the truth? “If everyone else is lying, what’s the big deal” kind of thing. Slippery slope if you ask me, and dangerous if one wants to avoid courtrooms. I encourage those I work with to deal honestly. Hopefully his students are better, I don’t like the idea of thousands of people entering the industry trying to find sellers willing to sell via subto who all think it’s okay to bend the truth, especially with transactions like subto that are complicated and require a lot of trust on behalf of the seller (that the buyer will do what they say and keep making the payments and not wreck the seller’s credit potentially affecting their ability to have a place to live in the future because you can’t even rent an apartment with bad credit). Lawyer’s wet dream.

So....
When we review what is RICO charges....
Racketeering Influenced and Corrupt Organizations Act.
Is he part of an organization: CHECK. Is he the head of, organizer of, organization at his direction: CHECK
Now, what is Racketeering? "Dishonest and fraudulent business dealings"....
Ok, so now we have videos stating to knowing the directed actions result in, directly, various breach of contracts etc etc as DOSC shows. That states KNOWLEDGE of wrong doing. And by how many videos stating INTENTION. And the obvious, again well documented, FOR PROFIT....
Knowledge and Intention of wrong doing for profit. If that isn't "dishonest and fraudulent business dealings" I don't know what is.
Given the size and scope of things, and "community" one could readily argue addition of organizer and head of a Criminal Syndicate.
Look, I am not saying all this is going to happen, that Pace will soon be lead away in cuff's for an all expense paid lifetime pass to "club Fed".... But when/if it happens it won't shock me 1 iota.
Honestly, my only surprise in it is that it hasn't happened yet. But WCC Division has a history for that, just sitting back and compiling evidence until it's at epic proportions enough to be a slam-dunk and, with all the ancillary people along with. Just ask Jordan Belfort.
IDK.... Who know's, I have as much trust in FBI as rest of F.Gov nowadays. I got a funny feeling all one has to do is make a campaign contribution or hire a specified crack-head to board of directors and like magic your a saint.... Al Capone would have loved this world. He'd probably have ran it better.
2 Reply
Steve K.
OP
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
Quote from @James Hamling:

Quote from @Steve K.:

Quote from @Account Closed:

Quote from @Steve K.:
I don't have a lot of confidence that those numbers are true (10 DOSC for him, a few dozen for his students), considering the source. It could still be zero DOSC for him and he's only saying it's 10 plus these other dozen or two dozen he's helping students with, so he can do a video about how he "gets around them", letting everyone know he's still the self-proclaimed "King of Subto" lol. For me, once I see someone getting caught up in their own contradictions, it's unclear from that point forward whether or not I should believe anything they say. That's the problem with lying, right?
Yeah, it's tough to believe anything he says. Buyer beware.

Just watched a video where he says “People know me for the phrase “buyers are liars and sellers are worse”” and he’s printing shirts that say that... For one, that phrase has been around since before he was born. Secondly it’s not a nice phrase. Sure there’s some truth to it and you hear a lot of people say it, but it’s pejorative and negative. Not a great look for someone mentoring others IMO. Seems like maybe he uses the fact that buyers and sellers sometimes lie as justification to set the bar super low for himself when it comes to telling the truth? “If everyone else is lying, what’s the big deal” kind of thing. Slippery slope if you ask me, and dangerous if one wants to avoid courtrooms. I encourage those I work with to deal honestly. Hopefully his students are better, I don’t like the idea of thousands of people entering the industry trying to find sellers willing to sell via subto who all think it’s okay to bend the truth, especially with transactions like subto that are complicated and require a lot of trust on behalf of the seller (that the buyer will do what they say and keep making the payments and not wreck the seller’s credit potentially affecting their ability to have a place to live in the future because you can’t even rent an apartment with bad credit). Lawyer’s wet dream.

So....
When we review what is RICO charges....
Racketeering Influenced and Corrupt Organizations Act.
Is he part of an organization: CHECK. Is he the head of, organizer of, organization at his direction: CHECK
Now, what is Racketeering? "Dishonest and fraudulent business dealings"....
Ok, so now we have videos stating to knowing the directed actions result in, directly, various breach of contracts etc etc as DOSC shows. That states KNOWLEDGE of wrong doing. And by how many videos stating INTENTION. And the obvious, again well documented, FOR PROFIT....
Knowledge and Intention of wrong doing for profit. If that isn't "dishonest and fraudulent business dealings" I don't know what is.
Given the size and scope of things, and "community" one could readily argue addition of organizer and head of a Criminal Syndicate.
Look, I am not saying all this is going to happen, that Pace will soon be lead away in cuff's for an all expense paid lifetime pass to "club Fed".... But when/if it happens it won't shock me 1 iota.
Honestly, my only surprise in it is that it hasn't happened yet. But WCC Division has a history for that, just sitting back and compiling evidence until it's at epic proportions enough to be a slam-dunk and, with all the ancillary people along with. Just ask Jordan Belfort.
IDK.... Who know's, I have as much trust in FBI as rest of F.Gov nowadays. I got a funny feeling all one has to do is make a campaign contribution or hire a specified crack-head to board of directors and like magic your a saint.... Al Capone would have loved this world. He'd probably have ran it better.

Yeah we saw this on here with Clayton Morris/ Morris Invest a few years ago. The cat was out of the bag for a long time within the industry before any of the "Powers that Be" did anything. It seems that it takes an article in a big publication for them to do anything (NYT finally did a piece on CM), and journalists don't like to write those articles until there are lawsuits (even better a class action) so they are not just repeating industry gossip. Same thing with GC, a lot of people had suspicions (it's kind of obvious hearing the guy talk) but journalists didn't cover it until there were lawsuits. Once there's a suit they can quote the complaint from the suit rather than propagating hear-say. So I'll wager that if it all does start to unravel it won't be until after a few deals go sour and people start suing each other.
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