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  1. Hi Mike Once you set up the deal or the escrow company additional payments on the note are simple to calculate I would advise buying t-value software, its a great tool to figure out what additional payments would do to the note balance. Its $125.00 for the program on disc or download, from paper source.com It also runs any amortization schedules you desire Don't buy all the additional stuff they offer for a year. Hope this helps Tom
  2. Looks like a nice way to go I checked my calculation and it appears it would run 120 months to pay off the principal with zero interest As Michael said the escrow attorney can and should draw up the note, and of course any additional payments can be applied to the principal. Tom
  3. Hi Naked Investors, Been awhile since I posted a topic, however i do read the topics frequently I wanted to ask about when you reply to an ad Do you often get a response asking are you a robot? Just wondering if its just my ip or is it standard now It does not happen on all replies but several i keep the reply simple with out a web page or anything This happens when I reply to a business for sale Thanks in advance for any responses Tom
  4. Gary I read your post and Michaels reply and think the requirements you mentioned, as far as debt to income and general qualifications to be sure the t/b can afford the property would be met if you have a mortgage broker on board to qualify would be tenants. This is a good practice to have as you can inform the seller of the t/b ability to purchase his property and how long it could be for them to qualify. Just my opinion of course. Tom
  5. Thanks Michael for your fast reply, I should have asked your thoughts on post that I have read about needing a license to now do lease purchaseing, i know its an old issue. Do you think being a principal in a transaction will suffice anymore? Thanks again, Tom
  6. Hello Michael I want to wish you and the fellolw investors a happy new year I have not seen much activity on the forum this year Has the dodd frank law slowed down the lease purchase investing? I hope it has not and would like to hear from some investors as how they are working the market Best Regards Tom
  7. Hi again Kyle, Thanks for your response, I felt my letter of intent was also a little to scary for some folks. As far as getting sellers here in my area of IL I have had some luck not a lot by calling sellers off there yard signs in my local area. I just got bored with no real good sellers on craiglist. i also needed to get out and get active, I also send post cards to listed properties, as in my local area, I can keep tabs on how long certain properties have realty signs and the change of realtors on each one. It also saves me a lot of gas, iF you ever have a property in my area and its out of your way, perhaps we can joint venture to ease the pain, just shoot me a reply here. Tom
  8. Hi Kyle, I'm also in IL and was wondering if you would share with us your letter of INTENT I have made one up but could use some advise on the wording Thanks Tom
  9. Brian, Great posy and seems like a great program. If I may ask you a couple questions before I buy it. On gmail which I have now: Does canned responses when set up save as a draft? (thats what Im getting on mine) First email when set up on program Does it send this out for you automatically? Do you use auto-reply on the program? Is there a need for canned responses ? if auto reply is set to describe what you do Hope not to many questions for you . appreciate the time if you review my questions and reply Tom
  10. Steve, Info I received from a master broker on seller finance 2014 Seller Financing Regulations Explained Reprinted with permission by Jeffrey R. Armstrong – President/Owner of Armstrong Capital Your favorite Master Note Buyer – Straightforward, Honest, Fair… Ric Thom is one of the leading authorities in seller carryback real estate contracts. He owns Security Escrow in Albuquerque, New Mexico. He has served as a director and the president of Valencia County Board of Realtors. He also served as a director of the Albuquerque Board of Realtors as well as a director of the Realtors Association of New Mexico. Ric was recently named Affiliate Of The Year to the Albuquerque Board of Realtors. He is a certified instructor for the New Mexico Real Estate Commission’s continuing education program. He teaches the course “Practical Application of Real Estate Contracts,” which he created. SETTING THE STAGE First, none of what follows affects anyone today. It all applies to transactions on or after January 1, 2014. Further, none of it applies to any seller-carryback transactions where the buyer will not use the property as their personal residence. When Dodd-Frank (“The Dodd–Frank Wall Street Reform and Consumer Protection Act”) was enacted into law on July 21, 2010, it said that you could only do three seller carryback transactions a year, and those transactions had to meet certain requirements: (1) The note could not have a balloon. (2) It had to have a fixed interest rate for five years, then it could adjust. (3) You had to prove and document the buyer’s "ability to repay" in accordance with the Qualified Mortgage Rule (QM), which is quite restrictive. That’s the same rule that banks have to use if they want a safe harbor and not get sued for making a loan that didn’t fit the QM. The Consumer Financial Protection Bureau (CFPB), which was writing the regulations to implement Dodd-Frank, asked for public comments. I told Bill Mencarow about this, and he immediately (and repeatedly) alerted PAPER SOURCE JOURNAL subscribers and everyone else he could think of, urging them to submit their comments. I also alerted members of Congress and got the National Association of Realtors on board and helped them write their comments to the CFPB. Because so many people wrote comments to the CFPB —- and THE PAPER SOURCE took the lead — the bureau relaxed the seller financing restrictions. They came out with something that was a lot more relaxed than the Dodd-Frank law was originally. The CFPB subsequently issued the following regulations. They apply to seller carryback notes created on or after January 1, 2014. THE ONE PER YEAR CATEGORY The CFPB broke seller financing into two different categories. One category is for those individuals, trusts or estates who do just one seller carryback transaction a year on a property that has a dwelling that the buyer will use as their primary residence. Let me repeat that, because there has been so much misinformation circulated about it: this category is for those individuals, trusts or estates who do just one seller carryback transaction a year on a property that has a dwelling that the buyer will use as their primary residence. For them: * You can have a balloon in your note with the buyer. * You do not have to prove or document their ability to repay. * The note must have a fixed interest rate for five years, and at the end of five years the interest rate can increase no more than two points per year with a cap of six points above whatever you started at. You have to tie it to an index like a T-bill or the prime rate in the beginning. That’s probably going to affect all but three to five percent of individuals who carry back notes. Remember that these restrictions only apply to seller-carryback transactions on properties that have a dwelling that the buyer will use as their primary residence. A transaction on a lot or vacant land is exempt, even if the buyers plan to build a primary residence. If the property has a dwelling, but the buyer is not going to use it as their primary residence — say they’re going to rent it or use it as a second home — then none of this applies, and you can offer seller financing with no restrictions. Commercial property and multifamily that is five units or larger is also exempt from the restrictions. Again, the one seller carryback transaction per year category applies to individuals, trusts and estates. It does NOT apply to corporations, LLCs, partnerships or other legal entities. In that case the second category applies (below). Again, these rules only apply to what the CFPB refers to as a residential mortgage loan where the note is secured by a dwelling or residential real property that includes a dwelling. Most people only carry back a note once in their lifetime, when they sell the big house, retire and move somewhere else. Some might do it a few more times. Even many real estate investors only do it once a year. These regulations are not a huge change for most people. THE MORE THAN ONE PER YEAR CATEGORY The second category applies to individuals, trusts and estates that do more than one seller carryback transaction per year when the buyers will use the dwelling as their primary residence. It also applies to any seller-carryback transaction — even one — where the seller is a corporation, LLC, partnership or other legal entity and when the buyers will use the dwelling as their primary residence. * The note cannot have a balloon. * The note must have a fixed interest rate for five years, and at the end of five years the interest rate can increase no more than two points per year after the fifth year with a cap of six points above whatever you started at. You have to tie it to an index like a T-bill or the prime rate in the beginning. This is the same restriction as the first category. * You must determine the buyer's ability to repay. * If you do no more than three seller-financed transactions per year you do not have to become a Mortgage Loan Originator (MLO). * If you do more than three you must become an MLO -- or find an MLO who is willing to be the go-between. Just as in the “one per year” category, these restrictions only apply to seller-carryback transactions on properties that have a dwelling that the buyer will use as their primary residence. If you have a rental house and the renters want to buy the house to use as their primary residence, and you want to carry back a note with a balloon (and you don't do more than one seller carryback transaction per year), and that rental property is in a corporation, LLC, partnership or other legal entity, you’re going to have to move the property into a trust or into your personal name. Otherwise, you’re going to fall into the second category which says you cannot have a balloon unless you are an individual, trust or estate. If you think about it, not having a balloon but being able to do an adjustable rate almost serves the same purpose. Let's say you start out with an interest rate of 6% on the note and then after five years it goes to 8%, then it goes to 10% and then it goes to 12%. That’s a huge incentive for the buyer to refinance out of the property and pay you off. If they don’t, then you’re rewarded for your risk in carrying that paper; you’re now getting 12% for holding that paper, and there is no balloon. ABILITY TO REPAY The second category requires you to determine the buyer’s ability to repay, but the rules and the regs don't specify any standards for doing it (such as the qualified mortgage standard, a 43% debt to income ratio, etc.). You don’t have to do any of that; you can just ask them if they have a job, can you see a paystub, can you see their tax return (which they may or may not give to you). All you are required to do is to make some good-faith determination that they’re able to afford that payment, and you do not have to document it. It would be prudent to have some documentation in case there’s a default and the buyer's attorney says "where’s the documentation?" and tries to create a legal defense against paying you. But there is no requirement that you have to document. All it says is that you should determine the buyer’s ability to repay. I asked an attorney at the CFPB about how one should determine the buyer’s ability to repay. He said that if you fall under category two you have to determine the ability to repay, but he admitted that there are no set guidelines. You just have to show that you used good faith in determining, for example, that the buyer has a job, his rent was $1,000 per month, but the payment on the note is $900 a month and you think in good faith he can afford this property because he could afford the rental house he was in before. WHEN YOU’RE BUYING A NOTE CREATED ON OR AFTER JAN. 1, 2014 You're going to be able to tell from the note if the mortgagee is a private individual or an entity. If it is a private individual, trust, or estate, then ask them to sign an affidavit saying that they have not done more than three of these in a 12-month period and how many of them had balloons. If it’s an entity, an LLC, or a corporation, etc., ask for an affidavit saying how many it has done and how many of them had balloons. If there is a balloon in that note that you’re buying from an LLC, corporation or partnership, etc., you know there’s not supposed to be one (again, if that note was created on or after January 1, 2014). You’ll have to have the note modified to remove the balloon before you buy it. Otherwise at some point the mortgagor could use the fact that the note was not in compliance when it was written as a defense against paying the debt or foreclosure. One more thing -- I want to thank Bill Mencarow and PAPER SOURCE JOURNAL subscribers for getting the word out there, because, honest to God, without those comments we would be stuck with the original statute -- which would have killed seller carrybacks. In the Federal Register the CFPB wrote that they relaxed the rules on seller financing because of the numerous comments they received. Written by Ric Thom Visit his Website at www.securityescrownews.com This article was originally published in THE PAPER SOURCE JOURNAL. Visit their websites: www.PaperSourceOnline.com www.PaperSourceUniversity.com and www.PaperSourceSeminars.com or call 1-800-542-2270 for information.
  11. Hi All of you Hope for a happy and prosperus new yr to you all I was wondering if any of you have had to make any changes to your contracts(Illinois) due to the new dodd frank law. I purchased mine a few yrs ago from Michael and have not made any changes to my contracts. Any replies or advise greatly appreciated Thasnks Tom
  12. i only had an opportunity once to try it with a realtor, and he went along with the option, but wanted to have contract written so he would get listing to sell at expire of option, seller was not agreeable needless to say it didn't work out some things I have been advised to were to make sure is to try to use your own lawn sign, as a lot of folks shy away from realtor signs due to credit worries,.and to make sure contract is for only the one specified property so far I have not tried using a realtor again, but it could be good if you have a mutual understanding and agreed approach to the deal.. finding the right realtor is the key Tom
  13. Hi Seems like all investors are laying low right now. Would like to ask 3 questions, appreciate any replies 1- What if any is your canned reply to "What if t/b won't move out or stops paying the rent" (I think I know the answer, (any short smooth reply you guys use?) 2- If a property has several family members (heirs) Do they all sign option upfront? 3- Would you leave a blank c/a option & lease for there review? ( can never get them together all at once) Thanks in anvance for your replies, I currently have a property as described above to try and complete Tom


    Hi I have been getting replies from fsbo's from craiglist The email is always a craig's list email address reply I was wondering do I run the risk of getting flagged ? Do any of you reply to these craig's list emails that you get from sellers etc? Thanks Tom
  15. Hi John I have not used your sellers number sheet yet, that you email back to them after they call you. How do you reply to them if there property is to far above comps in the area? Do you call them back before you apply any numbers to the sellers sheet or do you just email your figures based on the comps in the area ? Thanks Tom
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