All Forum Posts by: Ted Akers

You cannot any longer assign short sales, and as you said some bank REO's. As far as the bank is concerned your offer is a cash offer in that there is no financing contingency. Most banks will accept a POF from us, which you can generate to be property and price specific at my website. Hope that helps, but feel free if you have additional questions.

Hey Joel,
I would love to be able to roll my funds 15 times per month, but same day deals are a challenge to put together and thus to find for funding. Numbers do vary, but FHA is around 40% of all mortgages now. My suggestion to avoid FHA was to someone new to transactional funding and looking to do same-day deals.

For experienced transactional funders it does also pose some issues, as FHA buyers are more likely to fall out of the underwriting process. Some have been done, but most FHA lenders will not get them done same-day (they want the appraisal ordered after the transfer of title to you and some want the purchase contract executed after title transfer). There are only a small handful of transactional funders lending "extended" transactional funding due to fallout and frequent delays. Cash buyers are obviously the best target for transactional funding, which does save you money versus other alternatives. Finding a conventional lender without 90 days of "title seasoning" required, and especially an FHA lender in your local market that will pre-underwrite, and fund same day is gold and would give you a serious leg up on your competition and substantially increased profits. They are not easy to find in this market. Focus on community banks, mortgage bankers with in house underwriting, and maybe some credit unions (although most credit unions do not actually hold their mortgages).

Even though FHA has waived their 90 day title seasoning requirement, it is a cahllenge to find lenders who can actually get it done. You also want to be aware that if you have a buyer with 20% down payment most wholesale lenders can waive title seasoning requirements. You want to know it because most loan officers at those lenders are likely not aware of it.

Coordinating same-day deals is a challenge but worth pursuing because your net profit is much better, and many of these deals do not qualify for hard money lenders based on LTV's. A cash buyers list is golden but a local lender without title seasoning and an FHA lender who gets it can be even more so.

Transactional Funding is not rocket science, but you want to fully understand all aspects of the deal before putting funds out there; or as Mitch put it, you can become the proud owner of a property you likely do not want. Typically you are not on title but do have a mortgage and note as a backup to the B-C leg not closing. In that situation you could have to go through and pay for an actual foreclosure. There is a structure to avoid having to go through foreclosure, but it involves a somewhat burdensome set of closing documents.

If you wish to get your feet wet try initially to focus of cash end-buyer transactions. If a mortgage for the end buyer is involved do require that you speak to the lender and verify that they understand the property is being flipped (most lenders require 90 days of title seasoning - the investor on title for 90 days before it can be resold). Ideally you want to see the underwriting conditions from C's lender with a "clear to close" status.

If new to the game I suggest not doing any deals contingent on any delay for any reason for the lender to actually fund the B-C transaction. For example, do not get involved with an FHA end buyer. The other risk is outright fraud, which has happened and has involved title/escrow companies. I suggest not funding transactions with small title/escrow companies who do not have actual experience with back-to-back transactions.

Yes, congratulations on your perseverance. Nice work.

Steele,
Good point of clarification. The treasury changes are "guidance" until the effective date of 4/5/10. Some of our banking friends have not hsitorically responded well to guidance. Hopefully after the effective date Treasury will enforce the changes.

Charles,
Good point in this post. A foreclosure will have a longer term impact on credit scores and ability to qulify for a conventional mortgage. Recent changes by the US Treasury also now are requiring full discharge of the homeowner, so no longer an option for pursuit of a deficiency by the lender. If interested in the post the link is: http://www.biggerpockets.com/forums/103/topics/42310-short-sales-encouraged-by-treasury

Congratulations. Great story and attitude. You took a calculated risk and took action to make it happen. Nice job!

Good response here by Bill. One other answer might be that you submitted as a cash offer to strengthen the offer because that eliminates financing contingencies or outs. Most transactional funders will not provide hard POF's to not have account information floating around out there. I would not encourage it, but if push comes to shove you may be able to have your transactional lender speak to them. This is a double edged sword though in that if the realtor asks detailed questions the funder cannot (or should not) decieve them about how transactional funding works.

I would vote twice for Scotts response if I could (and I come from the mortgage industry). I just posted this article elsewhere. One telling comment in that article is the statement by Core Logic - "but the investors still pose an important help for lenders to unload properties"