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Dodd-Frank 2014


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#16 <Steve>

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Posted 02 January 2014 - 10:09 PM

Tom-

 

That's a good summary.  Didn't know about the "One Per Year Category" and can still have a balloon.


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#17 ErikOk

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Posted 08 January 2014 - 04:10 PM

Anyone else received any more feedback from their attorney on this?

 

I going to be checking out how this might affect our RE business.

 

Lots of buzz going on in the different forums/sites relating to D/F

 

Erik



#18 ErikOk

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Posted 08 January 2014 - 07:20 PM

Good interview I found.

 

My understanding is that D/F does apply to LO's (since the intent of the LO is to sell the property).

 

So the best way, according to the attorney on the interview, is to handle any RE transactions that involve owner financing by using a mortgage loan originator for your deals.

 

http://larrygoins.co...dodd-frank-act/

 

 



#19 MichaelC

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Posted 08 January 2014 - 08:28 PM

I agree.  My opinion is that the new law has little bearing on what we do via lease options.  I'm not giving it a second thought.



#20 <Steve>

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Posted 08 January 2014 - 08:40 PM

My lender ask me how is he suppose to qualify a tenant/buyer for a Lease Option?  He only originates mortgage loans.


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#21 MichaelC

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Posted 08 January 2014 - 08:47 PM

My lender ask me how is he suppose to qualify a tenant/buyer for a Lease Option?  He only originates mortgage loans.

 

:D
 



#22 ErikOk

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Posted 08 January 2014 - 10:01 PM

My lender ask me how is he suppose to qualify a tenant/buyer for a Lease Option?  He only originates mortgage loans.

From MC's response it looks like you were joking. But if not, I think that one of the qualifiers in the D/F is debt/income ratio.

 

My understanding is that you should use a mortgage loan originator to cover all your bases and make sure the tenant/buyer isn't setup for failure.

 

Did you have a chance to listen to the audio link?



#23 <Steve>

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Posted 08 January 2014 - 11:04 PM

Erik-

 

Yes I listen to the audio.  It was informative, but for explaining lease options it was minimal.

 

The only thing I see repeating in what I have heard and read are the offering rent credits.  Seen as kind-a-like financing the purchase price.  But a lease option does not convey title and the tenant is not a buyer until the option is exercised.

 

The D/F law is no way clear on lease options.  In fact it says nothing.  So who knows?  

 

So for me I am going to try to Comply by Lease Application.  When a tenant/buyer applies for a deal, I will ask for:

 

-drivers license

-pay stub

-first 2 pages of last years tax return or W-2

-bank statement

-pull a credit report

-the rent amount is not greater than a third of his gross monthly income.

-and other lease application verifying that is typical.

 

I will not be doing the things that require being a licensed mortgage originator; and a 43% debt-to-income is not required for a lease option.  I do not do financing so the tenant/buyer will need to contact a lender.  I also no longer offer any help with getting the tenant/buyer financed.  It's all on them.

 

For Rent Credits, the Naked Investor agreements state that the tenant/buyer does not receive the rent credits until the option is exerciesed...?

 

I may add something in a disclosure defining a lease option and stating it has nothing to do with financing, and the tenant/buyer has been explained to contact a loan originator for financing.

 

That's where I'm at with all this. :blink:

 

Oh, I don't sell houses either, I sell deals via assignment.


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#24 echriston

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Posted 23 January 2014 - 04:39 PM

From what I have been hearing with other people that do lease options this does not apply mainly it applies to investors doing owner financing and with their balloon clauses. Just keep referring to option fee, option this and option that and you should be ok. Now if you are presenting yourself other than that, well maybe. Here is a video I was sent from legalwiz that explains this,  https://plus.google.com/u/0/

 

 

Evan



#25 JvM

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Posted 30 January 2014 - 10:23 PM

I've heard a bunch of people's take on it & the main takeaway for me is to not do rent credits & instead do a seller concession (if all payments are made on time, etc.) That way it's the same effect to the T buyer, but only happens if they buy & at that time.

 

I'm also going to put a disclosure in there for buyers that explains it's not covered under Dodd-Frank because it's not a sale or any form of financing. They are simply leasing the property & have the option to purchase only if & when they decide to do so & at that time... (something like that).

 

Basically this won't be policed by the gov, instead it will be by lawyers (ambulance chaser types) that will have ads like.... "Did you buy a home with owner financing after Jan 10th 2014? Well, I can get you up to 3 years of payments back!"

 

Then it will be the courts that will decide & set the precedent as to what they interpret the law to mean in regards of lease options.

 

My 3 cents,

 

JvM


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