All Forum Posts by: Dennis Wasilewski

You get a commercial loan under LLC, with all three of you guys bringing cash & personally guaranteeing it.

A house can be sold on the MLS in bad condition or not viewable. Any investor on a buyers list is watching the MLS too. The argument seems to be that if sellers knew better why would they go through a wholesaler as opposed to listing it at the right price.

Before I pick up where I left off, I do want to clarify something that I said in last week's newsletter. I made the statement, "There is no effective date..." in discussing the changes to the QM rules, HMDA and the HPML escrow rules. While it is true that the law became effective on May 24, 2018, when President Trump put the pen to paper and signed "Bill," there is no guidance or regulation for institutions to follow so we cannot advise that the rules are in effect if there is no regulation to tell you how to comply with the law. Make sense? I understand the confusion and frustration that many of you are feeling, when the point of the law IS regulatory relief, but be patient... it IS coming. The Agencies began working on the Volcker Rule last week and, on Monday, jointly issued a proposal that would amend the Rule to provide banking entities with clarity about what activities are prohibited, improve supervision and implementation of the Rule, and simplify compliance. We can hope that some of the compliance provisions, such as HMDA or HPML escrow, will be addressed soon, but it is anybody's guess at this point.

Now, let's look at some more provisions in the new law:

• Title 1, Section 106 amends the S.A.F.E. Mortgage Licensing Act of 2008 to revise the Act's civil liability immunity provisions and to temporarily allow loan originators that meet specified requirements to continue to originate loans after moving:
  • From one state to another, or
  • From a depository institution to a non-depository institution.
• Title 1, Section 109 will amend the TRID rules to remove the 3-day waiting period requirement if the consumer received a second offer of credit from the same lender with a lower rate. It also expresses the "Sense of Congress" that the Bureau should issue clearer guidance on the application of TRID in relation to mortgage assumptions, construction-perm loans, and the reliability of the Bureau's model disclosures.
• Title 2, Section 210 amends the FDIC Act to raise eligibility for the 18-month exam cycle for those institutions with $3 billion in assets (increasing from the previous $1 billion in assets). Guidance will need to be provided to explain how those institutions currently scheduled for an exam will be handled (Will they still be examined this fall as originally planned on the 12 month schedule or do the regulators plan on re-doing their schedules and, thus, changing the dates of any currently scheduled exams?).
• Title 3 Section 301 amends the FCRA to increase the length of time a consumer reporting agency (CRA) must include a fraud alert in a consumer's file. It also: Requires a CRA to provide a consumer with free credit freezes and to notify a consumer of their availability;
  • Establishes provisions related to the placement and removal of these freezes; and
  • Creates requirements related to the protection of the credit records of minors.
• Title 3 Section 313 amends the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 to make permanent the one-year grace period during which a servicemember is protected from foreclosure after leaving military service. This protection is covered in the SCRA (HUD) past due notice that you give to your past due mortgage customers.

That wraps up this two-part series on our good friend "Bill" who made his journey all the way across Capitol Hill and actually became a law. I know everyone is excited to see what "Bill's future holds as regulatory relief cannot come soon enough, but think of it this way... You already have the processes in place and, as far as the older requirements go, it should be easy to continue to do so until you are told to do differently. With HMDA, many of you have just spent a good deal of money to get your systems ready to be able to collect and report under the new requirements. Can you even go back to doing so under the old rules without having to spend more money? Take some time to breathe and relax. As I keep saying, it is coming. They have no choice now. So, be patient and just keep doing what you have been doing until we are told to do differently.

Thank you both. This is exactly what I was looking for.

I have an inherited tenant that is currently bedridden. The agency working with him wants to construct a ramp to ease taking him into & out of the unit (3 steps & step up into door). Anything I should request or require?

Sewer and trash is billed back to tenants by me. Everything else is in their names.

Originally posted by @Gregory H.:

So I'm clear on the details, when everyone "agreed" originally that you would switch the financing from you personally to your LLC, was the agreement a signed document, or was that just a verbal/email chain agreement?

In lieu of doing a novation, we all had a verbal/email agreement to terminate & re-sign. 

I hadn’t considered an actual agreement to cover terminating & resigning but after this I certainly would in the future. 

Of course none of us realized the seller wasn’t familiar with the actual terms we had originally signed on. 

Thanks all!

Ha! It was a wild ride. Until that point the seller had seemed super reasonable. If he & I had talked directly the morning it all fell apart then I think we could have just struck the same agreement. Minus driving everyone crazy for a few hours.

After over a month of waiting for appraisals, environmental assessments, inspections by city, etc we are two days from closing on a 6-unit building about an hour and a half outside Philadelphia.

While reviewing the HUD I noticed the seller assist is missing so I follow up on our group thread - my agent, seller, seller agent, title closing agent and my lender. Next thing you know the seller responds that they don't recall any discussion of seller assist and will be talking to their agent. Fast forward to the next morning when the seller responds that the text on the PSA was not centered (dotloop left-justifies all the text) and the font was too small so it was never identified by seller or agent. And therefore the seller is unable to come to settlement. This is a PSA that's been around since late March!

What?! How could he do that you might be asking. Well, when I signed the PSA it was in my personal name but the financing (6-unit) is in a new LLC. We all agreed weeks prior to just terminate the contract at closing (to avoid any potential PA transfer tax implications for substituting my LLC) and sign a new one in the name of my LLC. Guess who was refusing to do that & putting me in a tough spot. Bail on the 6% assist with my tail between my legs? No no no.

The next few hours were countless phone calls to title, lender, insurance agent & real estate agent to find out how/if I could flip financing, insurance and title insurance to my personal name to be able to close under the existing PSA. I always thought the talk of having a ‘team’ was a bit over-the-top but during those few hours a lot of people dropped everything to work out how to accomplish this for me.

In the end I had enough green lights to have my agent make two offers back...

- buyer closes under his personal name with 6% assist or we’ll take legal action 

- buyer & seller amend contract in next 30 minutes to 3% assist & substitute LLC

— Oh and it’s not our job nor responsibility to read the agreement to you. Especially when you had amended literally the line below on closing date & initialed just off from the assist %.

The seller chose option 2 and we closed today! In the end we all left as friends. The seller & I exchanged numbers to stay in touch after having a great chat awaiting the mountain of paperwork. Craziest day in a long long while.