Buying Homes from the Government / from CNN MONEY

"The Bargain Bin"

http://money.cnn.com/2006/07/11/real_estate/HUD_bargain_homes/index.htm?section=money_latest.

From our Friends at REIClub.com

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Trust Fund !

     Trust Fund ; noun ; In common law system a trust is a relationship whereby property (including real,tangible and intangible) is managed by one person(or persons or organizations) for the benefit of another.
 Cathy Sarinana and I were discussing how a "Trust Fund" is created and why.Trust are created by a settlor,grantor,donor or trustor. It is created by the settlor who transfers some or all of his property to a trusttee who holds the trust property for the benefit of the beneficiaries. It is possible to create a trust of property w/o transferring it to anyone else(being held for the benefit of the beneficiary.The fund is created during the persons life by a trust instrument or they can be in a "will" after death.
 
The "trust" is govern by the terms under which the Fund was created and are usually written down in a trust instrument or a "DEED".Property of any kind can be held on a Trust and the uses can also vary. There are many kinds of Trust Funds,so make sure to evaluate what type of T.F.and how you plan to use the Trust Fund .For more info on types of Trust Funds and there uses, email:  hcompanys@yahoo.com and I will send you a list of Trust Fund  types and the characteristics  for each.

 I hope this sheds a little light on Trust Funds and their uses according to your specific trust that it will be held in.

                                  Greg Hernandez
                                    Hcompanys
 

Somebody's watching you/

My brother Larry Fernandez took this pic in Carlsbad NM. 12/3/2012. AROUND NOON , COOL

20 steps to buying 'NOTES by Michael A. Soliz Jr.'

Thinking of buying notes can be done online these days from start to finish. Michael Soliz Jr. breaks it down for us and gives us a 20 step recap on buying discounted notes,selling them and closing.

   20 Step Discounted Mortgage Note Buy/Sell Process

Step 1: Offer submitted by Buyer
The Buyer finds a note and submits an offer on Note# YYY. He will also provide acceptable Proof of Funds. The Offer will automatically be sent to the Seller. 

Step 2: Offer Sent to Seller
The Seller has automatically received the Buyer's Offer. The Seller needs to respond within two business days with countered, accepted or rejected. 

Step 3: Please Accept/Reject/Counter Indicative Offer 

Step 4: Please Complete Buyer/Seller Package

Step 5: Due Diligence Period
During this step you should gather two very important reports. A BPO & a Property Title Report.

A BPO, Broker Price Opinion, is a report on a specific property by a local real estate agent. It typically shows comparable sales, comparable listings, neighborhood data, estimated repairs, an opinion of value "As Is" and "Repaired", and photos of the subject property and area. It will be a "drive by inspection" without access to the interior. There is usually a nominal fee for report.

The second report, Purchase Ownership and Encumbrance Title Report, also known as a Property Title Report, is an information only title search (not insured) for the recorded owner and liens on the subject property. It typically shows the last recorded owner, asset valuations, taxes and if current, recorded liens, and recorded judgments. There is usually a nominal fee for report as well.

Step 6: Please Accept/Reject/Counter Final Offer 
At this step the buyer can choose to modify their offer based on their due diligence findings.

Step 7: Note Purchase & Sale Agreement
During this step in the selling and buying of a note process, the contract is sent out to both the Buyer and Seller with the final agreed upon price and terms. 

The Note Purchase & Sale Agreement is first emailed to the Buyer to print out and sign two copies. Typically, the Buyer will need to overnight or mail the two signed copies to the note servicing or exchange company.

Step 8: Note Purchase & Sale Agreement received from Buyer 
Once received received from Buyer and reviewed, it is then sent to the seller for signatures and he must return it to the note servicing or exchange company for filing and execution of sale.

Step 9: Note Purchase & Sale Agreement received from Seller
Once the Note Purchase & Sale Agreement is received from the seller, it is then verified to be signed by both Buyer and Seller and filed. A signed copy by both parties is sent to all parties involved.

Step 10: Total Deposit Due from Buyer
The Buyer makes a deposit that consists of at least these three things:

1. A deposit toward the purchase price of the Note. Usually 2-4% of the note purchase price and it is credited towards the amount due in closing.
2. Buyer's fee for the creation and recording of the new assignment of the deed/mortgage to the new Buyer. 
3. "Buyer Sales Processing Fee" is commonly calculated using basis points (a percentage of the note price) or a flat fee based on amount of note.
   
   For example, the "Buyer Sales Processing Fee" for a note purchase price up to a $100,000 is $450 (the minimum);
   the fee for a $300,000 Note purchase price $1500 (0.5%).
   
   

Buyer is given bank wire instructions and certified check information to complete the deposit process. Deposits are refunded if the sale is not closed due to no fault of the Buyer. 

Step 11: Total Seller’s Sales Processing Fee Due 
Seller approves and agrees to pay a "Seller Sale Processing Fee" that is based on purchase price & note type. This fee is paid from the Seller's net proceeds in escrow/closing as can consist of the following:

• Newly Originated Loans fee is calculated using basis points of the purchase price plus a minimum flat fee.
• Performing Loans have a fee that is calculated using basis points of the purchase price plus a minimum flat fee.
• Non Performing Loans fees are calculated using higher basis points of the purchase price plus a minimum flat fee. 
• Loan Pools have a fee that is prorated based on the status of the all the notes in the pool.

Step 12: Buyer Selects Loan Servicing Company
When newly originated mortgage notes, existing performing real estate type notes, or non-performing notes are purchased, a compliant loan servicer must be designated. The RESPA goodbye letter to the borrower will announce the transfer of loan servicing from the old servicer to the new servicer. You will need to select one of the three options below to complete the buy process:

1. Self Servicing: This is where an individual note buyer chooses to services his own notes. There are many Federal and State regulations involved in servicing that must be considered before an individual should attempt this. Most online discount note exchange companies will need to know that the self servicer is compliant before the transfer is made.
   
2. The Online Exchange: Quite often the company or service that you are using to buy or sell your discounted mortgage note will have the ability to handle servicing on most any type of mortgage or real estate note.
   
3. Other Servicer: The note buyer selects a independent mortgage note servicer. Once the buyer supplies necessary compliant information, the online note exchange service will instruct the previous servicer to transfer to the new designated servicer.

NOTE: When an existing secured loan by the principal dwelling of a consumer is purchased, the new Lender must notify the borrower with specific information as defined by S. 896 of the Truth In Lending. 

Step 13: Buyer Selects Closing Service
The Closing works similar to a new loan closing in that purchase funds are received from the Buyer and held while the proper documentation is received and forms signed by the Seller. There will also be a 104.1 title endorsement giving the Buyer the same protection the originator had. 

Once all documentation is in place, complaint and both parties are satisfied with the terms, the Closing Service will release purchase funds to the Seller, deliver appropriate documents to the Buyer, and record the Assignment to the new owner. You will need to select one of the three options below to complete the Buy Process:

1. Online Discounted Note Exchange Closing Service: Many of these online trading service offer licensed escrow/closing services to their clients as part of their exchange services.
   
2. First American Title and Escrow: This is a Title Insurance licensed escrow/closing service provided by First American Title's order fulfillment solutions department. They are widely licensed throughout the US.
   
3. Seller Designates escrow/closing service: On some occasions, the Seller may designate third-party escrow/closing service.

The customary fee for closing & escrow services shall include all basic escrow services and the following specific items:

• Liability flat fee calculated based on the purchase price
• Issuance of all checks except those to pay credit card or other debt not secured by the real property involved in the escrow
• Wire transfers of funds
• Coordination of acquiring the original title policy & coordination of all corporate documents
• There is an additional cost for the 104.1 Title Endorsement of $125 - $250 depending on the underwriter, and there is a separate cost for requested Title policies or other services.

At this point the online discounted real estate note exchange company's system send out a notification to both the note Buyer & Seller to view a list of escrow/closing requirements.

Step 14: Buyer Notified To Send Balance of Funds 
Buyer needs to send the balance due to the Closing Service. This would include the balance due on the discounted real estate note purchase, plus closing costs, document and recording fees. Closing Service will notify Buyer of exact amount Due. Wire information and 
certified check instructions will be included in their notice.

Step 15: Seller Sends Original Docs
Seller overnights the original Note/Deed/Mortgage and all Assignments to the Closing Service. 

Step 16: Seller signs new Assignment to Buyer
The online note exchange service will assign an admin to create and send the new Assignment to the Seller for signature. Seller will overnight the signed Assignment to the Closing Service. 

Step 17: Closing Service Title endorsement
Your designated escrow & closing service at this point will complete the 104.1 Title endorsement. This endorsement transfers title protection from the original policy to the new Buyer. Buyer will receive a copy. 

Step 18: Closing Service Records Documents 
As part of your fee they will automatically send the Assignment for proper recording to the local entities. When recorded, the Assignment is sent by the recorder to the Buyer for their records. 

Step 19: RESPA Letter Generated 
Seller is now prompted to send out the RESPA Letter to Borrower with copy to Closing Service Company. Seller directs the existing note servicer to send the RESPA "goodbye" letter to the borrower putting in the Buyer's selected loan servicer as the new servicer. The Seller also directs the existing servicer to email a copy of the RESPA goodbye letter to the Buyer and the Closing Service. 

Step 20: Closing Service Distributes Funds
Funds are disbursed to the Seller, third parties and final documents are sent to Buyer. Seller will receive his payment for the sale of his real estate note in the form requested. 

Discounted Mortgage Note Real Estate Niche
One of the great things about using a online note exchange service to make money in the discounted mortgage note, deed assignments or real estate note exchange niche, is that parties identities & funds are verified independently, each step is shown to both parties and transactions are time stamped and then checked off as it is completed. Also the The Buyer and Seller will know exactly where each is at in the process, and what needs to be done next. 

"EXIT STRATEGIES"

   Ahhh, exit strategies,even thought it might not sound important, some exits could be the most most important verbiage in a contract. Determining what your exit will be before hand can be a factor when trying to deal with time.One thing to keep in mind is that creative R.E. deals have different exits for different venues(short sales,rehabs,wholesaling,lease options,etc..).Refinancing,selling,and giving the deed back to the bank can be some options to look at when dealing with your transactions.

Exit Strategies can range from lease optioning,traditional sale,renting,and even wholesaling the deal.Remembering that things happen and having a exit strategy when something happens will allow you to preform when other wise you could not.In Real Estate, inserting a subject to clause means that your your offer is contingent upon other factors,such as appraisals/inspections that are acceptable,funding, finding a tenant buyer to buy property,partners approval or other things that may happen, and allowing to you back away if you have to,even after a offer has been written.I f you do your due diligence correct and feel comfortable enough, you can can pass on the property.

Disclosure's in your contracts with contengencies should be written in so your exit strategy is in place.
These are some exit's that may help you write your contract with protection.

• Subject to buyers approval of contractors estimate.
• Inspection clause
• funding clause
• agreements not met on contract
• offer is subject to the approval of buyers partner
• offer is contingent upon buyer finding financing from lenders
• 
  

"The Life of a Short Sale"

When it comes to the life and times of a shortsale, sometimes their not short meaning they can take some time to complete but are short when it comes to price. Short Sales : is a sale where the lender allows a property that is secured by a mortgage or deed of trust loan can be sold short(less than existing loan balance)with factors and stipulations involved.Short Sales are sometimes the last resort for lenders before proceeding with foreclosure and can be few and far in between.Borrowers who are looking to short sale must qualify, and experiencing financial hardships.

  After finding short sale candidates and contacting them, you have them agree to proceed with the s.s.,you will then start to accumulate paperwork to help the approval rate.Starting with the last bank communication statement so you can confirm what sellers have told you is in fact the truth and is accurate.You can start doing "due diligence" at this time to search for liens and anything that might cloud the process. You can then determine(if any liens,etc...are found)  if you would like to continue with the process and you can then have the seller contact the bank and ask for a short sale forms (third party authorization) package which will allow you to try and work with these creditors to have them release(remove) the liens.

 Your package will arrive and you can have the sellers fill out their paperwork as you will fill out the third party authorization which will give you authorization to speak with the banks personnel(loss mitigation dept.) that is assigned to the case.The bank sometimes very helpful and can inform on what and how the forms should be submitted.Reserving the right to do a full property inspection if the offer is accepted and negotiating can begin.Remember that a short sale will  avoid the foreclosure process which can be an advantage,one being credit record .There are disadvantages as well as advantages when doing short sales, we will cover these on a later article. The banks are in the lending industry not home selling industry, so they are at times looking to help if you ask.

Once the bank agrees to your offer, after you have prepared a case for them so that they know what the property worth might be, along with anything detrimental that will state why you could not and will not pay full price for the property.There are many things that will help your case when sending information to the bank and asking them to accept your low offer. Job loss,crime,major repairs,hardship,bk's,bad neighborhoods,etc.. can be just some of the information you can send the bank so they can consider or accept the offer. The more reasons the better.
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 You are then ready to submit the info to the loss mitigation dept. and you may have yourself a short sale accepted.Remember that building a case will require to prove the homeowners hardship,damage to property and comps for the area will support your submissions to the bank and they will help make a decision on the offer.Short Sales are growing and allow investors to submit a few documents and work out a compromise with the banks L.M.D. and purchase a home at a discounted price.

                                                                                                     Staff
                                                                                                Hcompanys