First, please forgive me for such a lengthy post, but I wanted to capture each and every word my RE agent wrote to me in my email:
"Also, I have some information that I wanted to go over with you that I just today found out about. I was talking to my escrow person at First American Title, and we were discussing what I had going on and I brought up that we should have some deals for her soon with your offers. We were discussing the reassigns/simultaneous closings, and she gave me some information that was very alarming as I want to ensure that you are completely taken care of and nothing can come back on you with these processes.
She mentioned that the banks are really starting to look into these types of transactions where there is a reassign or simultantous close. The reason being, the banks are finding this to be fraud as they feel that they sold the property to you, as the investor for much less and then the end buyer pays much more, which in turn creates an excessive profit to the investor. The banks are actually beginning to put clauses in their escrow instructions that include verbage such as watching the title for 60 days, or an addendum must be in place as to what all the parties are purchasing the property for so the bank is aware of what you are selling the property for to the end buyer. My escrow officer also informed me that the title companies are not willing to close these anymore as this has become a very serious problem with the banks and all cases are looked into as fraud, due to the excessive amount of profit the investor makes on the deal. Basically, this problem initiated as the banks fell the buyer could have come directly to the bank to purchase the property, so the banks are loosing out on more money. Even though there is disagreement, as the buyer would not have been there if it was not for the investor, the banks are pursuuing this fight and winning. The idea that rather then a large profit, the investor sets it up as a finders fee amount vs a large profit amt. The finders fee is something like $5,000. The issue with this is, that there are strict guidelines as to that border lining the need to have a real estate license.
After I had this talk with her, I have spent all day researching with several title companies and my principal broker and I am not able to find any title company that is willing to close these deals due to the potential for fraud allegations. This was not the news that I wanted to pass to you, but you are very important to me and I want to make sure you are protected and I am as well from these allegations.
So, please let me know if there are any title companies that you know of that are willing to close these and I can do some more research on that. Also, I strongly suggest consulting an attorney to see what they would suggest on this. The regular flipping of properties is completely fine still. The only thing would be to keep any receipts of repairs done to the property, so that we can show this is the reason the value is much higher when we sell it.
Some possibilities may be to purchase the property under a regular loan with your name, do a lease option for just 3months and sell it to them at that time. If you have any other ideas that may help this, just let me know. I am still kicking around some ideas with my broker as well to try to get a solution that will make sure you are covered.
For now, I think we need to address this and see what we should do. Please let me know your thoughts, I know this isn't what you were hoping to hear, but please remember that as your Realtor, I would not be doing you any help to not relay this information to you. I care too much to have something come back and bite you after a transaction. Let me know what you think and we will figure this out. Thanks again!"
Can anyone help me with how do I come back with an answer to address the likes of my RE agent and her escrow agent???? Thanks!
If you want to find title companies that do double closings, talk to Eric at www.coastal-funing.com This is all they do. They have a list of escrow companies that they work with who do double closings.
Hi Kim,
I know we are beating the land trust topic to death, but would it be possible to get an example of the actual purchase agreement and the land trust contract from the wholesaler you know so we can all see how he/she signed both of the docs? Seeing it on paper would help all of us undestand the exact way the purchase agreement is being signed "your name, as trustee" and naming your end buyer as beneiciary and also the way the land trust contract looks with the names of both the wholesaler and his/her end buyer.
This would give me (and others) the confidence that we know what these docs look like on an an actual closing that has taken place.
Thanks in advance,
Neil
One must agree with most of the points you raised. However, there are those that will raise some discussions. In the first place prices of many properties in the past were sold at too high of a mortgage, and that is where it all began. However, not all homeowners are at fault for losing their homes. In many cases, both husband and wife lost their jobs. This created extreme hardship and hence foreclosure/short sale/modification. Then there were those who did interest only or what we will call Prime Mortgages, and who will sooner or later be forced to pay both principal and interest at a higher rate. Then another case in point, where I co-signed for a family member who walked away from the mortgage, of course which I could not afford. I understand your frustrations, but we are living in some difficult times, and if we could take over someones mortgage to make life easier or do a rent to own option, this is where our true sense of caring comes in. It is unfair that the banks are asking 20% down, but not all banks are, you should shop around and let them compete for your business. We are living in the time when we have to look out for each other as we do here as brothers and sisters in the DG family. Do not let these banks take away your joy. Keep pressing on and success will continue.
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Hi Rina! Thank you for your input. That makes a lot of sense. I guess we just need to keep pounding the pavement, looking for private money.
Thank you for re-posting that thread by Shiela. I read that, too. I like the loophole. And Shiela seems to be having a lot of success, so when I read that, my ears perked up! So many of the ideas on here are great, but don't apply to everyone. Shiela's ideas seem great! I hope to see her on here more!!
Dominic and Kim