MichaelGibson

Here's a partial post from another forum that caused my concern: (The words in red are my emphasis.) ____________________________________________________ Real estate investors are in for a rude awakening January 10th, 2014. The way you do business will change dramatically thanks for the US government and Dodd-Frank specifically. There are 2400 pages of new rules and regulations in Dodd-Frank….enough to make your head spin. “This makes the SAFE Act look like kindergarten,” attorney Bryan Dunklin said last week during out weekly Coaching Call. Here are just a few examples of what it means to you: Real estate investors are in for a rude awakening on January 10th, 2014. The way you do business must change dramatically thanks for the US government and Dodd-Frank specifically. There are 2400 pages of new rules and regulations in Dodd-Frank….enough to make your head spin. “This makes the SAFE Act look like kindergarten,” said attorney Bryan Dunklin during last week's Coaching Call. Here are just a few examples of what it means to you: When you sell with seller financing, you will not be able to charge more than 5% over the going interest rate (currently 3.2%) and you cannot discuss any of the terms of seller financing with the buyer… only certain certified mortgage brokers can do that. There cannot be a balloon in the note and you must have a fixed interest rate for at least the first 5 years. The debt to income ratio must be 43%... but there 840 pages of other qualification rules too. There are a lot of rules about what you can and cannot put in your advertisement on craigslist or your web site. Violate one… and you could be in big trouble. My attorney says these rules apply to lease/options, contract for deed, and selling the beneficial interest of a trust too. Basically, any time a person is going to occupy the property (house or mobile home) as more than just a renter, you will be required to follow these new rules starting January 10th, 2014 Even if you "assign" a contract, you will be liable for the Dodd-Frank rules. And you are limited to 3 transactions per year… maybe less… depending on where you live. Using different entities will not work because of the rules they put in to Dodd-Frank. HERE’S THE REAL KICKER…. If, even after 3 years, your buyer claims that you did not properly vet their qualifications, they can sue you and get all the money back that they have paid you for 3 years, plus any money they have spent on improvements to the property AND their attorney fees. Of course, you might prove in court that you did properly vet them, but you will still lose because you will likely have $10,000 or more in attorney fees to defend yourself. You can be sure that as soon as a foreclosure notice is posted the urban terrorist… the contingent fee attorney… will be sending letters to the home owner suggesting a law suit to prove that it is all your fault that they are losing their home because you did not vet their qualifications. If you invest in notes… think twice.…because these rules apply to you too. Anyone who assigns or buys the note is equally to blame if the seller of the note did more than 3 transactions in a year or if the owner occupant claims that they were not properly vetted.

Has anyone analyzed the ramifications of provisions of Dodd-Frank 2014 as it releates to options, lease options, seller financing, such as the debt-to-income ratios, interest rates allowed, etc.? There seems to be quite a buzz about it. Don't know if it's something serious that needs to be reviewed as far as how we do business...or if these are just 'seminar promoters' who are using the latest news to develop a new product/seminar/webinar. Your thoughts?

I would rather be on the beach with a hot one (my wife, of course!)

Probably nothing, other than a possible criminal charge of fraud. It's not much different, however, than a supplier filing a materialman's lien (which does not require the homeowner's signature). You are simply putting the world on notice that you have an equitable interest in the property. BTW, I just checked with my attorney he he advised that a Memo of Option only needs to be signed by the optionee (and notarized, of course)....at least in Oklahoma. But as everyone knows, us Okies are a little different.

The Memo of Option I use basically states that I have an option to buy the property, with the legal description, my contact information, etc. At least, in Oklahoma, this is been enough to cloud the title. I sign it before a notary and file it with the County Clerk. I've never had a homeowner sign the Memo of Option. Do you think I'm making a mistake by not doing so?

Michael: Why does the Memo of Option have to be explained to anyone since the Optionor doesn't have to sign it or even see it?

From what I understand, pretty much everything is at a standstill until the debt limit issue in Congress is resolved. Will keep checking on the status and post updates as they become available.

Here's Some More Comments About This Issue From Another Forum: ---------------------------------------------------------------------------- This is about Marxism, period. I realize that this sounds like hype to the uninitiated, but private enterprise is being discouraged by over-taxation, over-regulation, and over-supervision by the government right now. Why? Because private enterprise is a threat to progressive government intervention. Personal freedom is too much freedom in this case. To add insult to injury, progressives are rewarding their high finance cronies for going along to get along with Frank/Dodd real estate financing debacle, by limiting competition. So, all this is a nod to the banking industry. Never mind that seller financing is the answer for those whom the banking industry won't finance in the first place. So, the problem they are solving is non-existent, except that it solves a pesky problem of progressives not having control over every aspect of everyone's life, business, and finances. It's sick. What's worse these progressive pawn off the task of imposing the regulations to a group of unelected people who are completely unaccountable to the public for what they enact. It transfers liability and responsibility away from the elected officials. Socialists have been enacting unpopular regulations through unaccountable bureaucracies like nobody's business in Europe. In the end, the people have no real remedy for actions taken against them, other than to riot. This is what the US congress is finding as a popular solution for themselves. This gives them 3 things: Unfettered reelections, maintenance of their income, and keeps the people a.w.a.y. Frankly, this congressional insolence, as experienced recently by the imposition of Obamacare which we learned we would, "find out what's in the bill after it is passed," thank you Nancy Pelosi, is what has given rise to the T.E.A. Party movement. So, at this point, we either wait and see what rights we lose on, or before, January 2013, or we protest like stuck pigs. I prefer the pig route. I'm not proud. -------------------------------------------------------------------------------- Would lease option be the way to go if this law is past? Being that title does not change hands till buyer exercises their option and the option coniseration is non-refundable if the buyer does not buy. -------------------------------------------------------------------------------- If this regulation is established as proposed, lease/options will be the only practical option for seller financing. Lease / options will be the next target. The vague term "habitual" seller financier is the buggaboo here. Each state has to determine what "habitual" means in order to be able to seller finance without government interference and these ridiculous limitations (and licensing requirements). Meantime, who would offer seller financing in the first place, if you had to go the entire 30 years, fixed interest only, regardless of the term of the underlying financing. So, yes lease options become the only option at this point (when the regulations are finally implemented as proposed).

Mike, I know I'm a noob on this forum, but I do know that what you have described is a short sale and it would have to be approved by the bank. It is a whole other ball of wax and it is best to just pass on these types of deals. Like Michael said, if your T/B decided to exercise their option and found out that they needed to go through the entire short sale process first (which takes on average between 6-9 months right now) before they could buy the house for the agreed upon price at the beginning of their lease, there would almost definitely be a lawsuit and you would almost definitely be included in it. I'm really not talking about a short sale at all. My question was simply, when I do a CA, what duty do I have, if any, to the buyer to personally check the status of mortgages and/or judgments, liens, etc., that could affect the passing of title, should they choose to exercise their option to buy. Of course, there's language in the paperwork that tells them they have the right to contact an attorney, etc. The strategy I use is to put a property under a pure option, as described in the NI manual. I then market for a T/B and present the offer to the L/S with the benefits of a LO. If the L/S wants to LO the property, since I have a principal interest in the property, I will prepare the paperwork for the LO transaction (with the proper releases for preparing the paperwork) and then release my option upon payment by the T/B. That way, my name is not on any of the LO paperwork between the L/S and T/B.

Michael - As you know, there doesn't have to be a "reason" behind it when the motive is government control of how EVERYTHING is done.

Still more info... http://papersourceonline.com/2786/red-aler...u-must-act-now/ HUD updates to the SAFE ACT: http://www.youtube.com/watch?v=nVGAxQfdP2A..._embedded#at=37

Found this information. Will post more when I find it. http://noteinvestor.com/tag/owner-financing-laws/ Just found another good article (in fact, this one is probably better): Pay particular attention to the info on the Dodd-Frank Act. http://www.realtor.org/wps/wcm/connect/d80...dfdff342c47dc89 And another... http://noteinvestor.com/sellers-corner/dod...wner-financing/

It is far fetched. I hope it is an internet hox. I'll contact the person who posted in the other forum and ask for the information on how to access the legislation. Will keep you posted.

I read this post on another forum by an individual that I respect, so I assume there's some credibility in it. I know we don't do a whole lot of owner financing here, but I thought it was worth posting just FYI...so, here it is: _________________________________>>>>>> As many of you know, on July 22, unless others in congress intervene, the US government will make it illegal to seller finance the traditional way. What does this mean to you? You will be limited to seller financing 3 properties a year. It will be illegal to offer short term financing. All seller financed loan will HAVE to be 30 years long. It will be illegal to include a "balloon payment." It will be illegal to offer "interest only." Your buyers can back out of any deal you offer within the first 3 years...! Your buyers are entitled to get ALL their down payment money back within 3 years...! Your buyer can unwind your deal AT WILL anytime within 3 years...! What does this really mean? 1. This means that you will not get paid off for 30 years if you offer seller financing. 2. You will have to put the buyer's down payment into a reserve account until your buyer's right of rescission expires after 3 years. 3. You will not be able to buy and seller finance more than three properties in a given year. All investors need to contact their congressman and senators and protest this malfeasance by the banking lobby to eliminate financing competition, and undermine the free market. Otherwise, we have no one to blame, but ourselves, for not acting.

Here's a short video of a humpback whale that was about ready to die from being entangled in a net...the efforts of a team to free him...and his amazing display of thankfulness and unimbridled joy. Here's the lesson that I took from it: It took a team (mentors) to free him...such as the NI manual and the team you have access to here at NI...and the joy that can be realized from being set free that which ensnares us, such as a job, fear of failure, etc. Watch and enjoy! http://www.wimp.com/humpbackwhale/