Realty411 Magazine Featuring OCG Properties - Part Two | Seite 27

by Bill Gatten
L
et’s face it …
the country,
the econ-
omy and the real
estate market is
just terrible. There
are no more good
deals. Let’s all get
out of the business.
People are not building, buying or selling
homes any more. There are so many over-
encumbered and foreclosed-upon cheap
properties available for pennies on the
dollar that nobody wants them anymore.
After all, who can make a living in this ri-
diculous business these days?
Oh yeah?
And Michael Jackson faked his death,
Elvis eats at Burger King, and the world
ends in three years!
Not that they’re needed anymore, but
here are a couple solutions to these hor-
rible problems facing real estate investors
in this disastrous economy:
1. Stay in bed with a tinfoil hat on your
head.
2. Go live with your parents and let them
feed you until you win the lottery.
3. Go back to school on the government,
and get a law degree so you can force peo-
ple to pay you to stop suing them.
OR...
4. You can capitalize on singularly the
greatest money-making opportunity ever!
And you don’t even need a dollar or a dime
to do it.
SHORT SALES
The short sale industry is burgeoning
now and will probably continue to do so
for three more years. New short sale mil-
lionaires are being made every day. There
are billions upon billions of dollars (Re-
member when a billion dollars was a lot
of money?) to be made in the “transac-
tional funding” of compromised mortgage
defaults — loans that would otherwise be
forced into expensive and time-consuming
foreclosures, and sold by lenders at public
auction.
Def: Short Sale: The acquisition of real
estate at a compromised (wholesale) pay-
off amount that is less than the balance of
the mortgage obligation.
Def: Transactional Funding: The two-
stage practice of using another person’s
A Brave New
World in
Compromise
money for a day
or two at a high
interest rate (but at
a reasonable cost),
with which to pur-
chase a foreclosed-
upon property by
means of an all-
cash offer prior to
its scheduled pub-
lic sale date. And then selling it on the day
of closing, or soon thereafter, in a separate
escrow settlement to an end-buyer who ob-
tains his own loan and lives in and loves
the property forever.
This process is known as the “A to B/B
to C transaction.” In other words, you, the
investor are the “B” component; the cur-
rent owner is “A,” and the end-buyer is
“C”. In other words, “B” buys from “A”
for, or in advance of, services to be ren-
dered, whether such services are actually
performed or not. Another common viola-
tion has to do with “sand bagging” by attor-
neys, and many non-attorneys, who bill on
a monthly basis for services (mostly loan
modification schemes) while a short sale
or loan modification process is presumably
taking place. Instead, either there never was
any such attempt or the attempt failed, and
“...two REALTORS ® in Massachusetts were recently
sentenced to five years in prison each for
having used this scheme several times.”
in one escrow closing process (taking full
ownership of the property), and then sells
the property to “C” at a reasonable profit in
a wholly separate escrow process.
It all sounds simple and it is! However,
a thorough knowledge of all the rules and
regulations concerning short sales, equity-
purchasing, equity-stripping, foreclosure
consulting, credit repair and mortgage
lending is absolutely mandatory before
becoming too far vested in the business
of short sales. To date, hundreds of other-
wise nice-guy and gal would-be investors
have been severally sanctioned, shut down,
heavily fined and/or sent to prison for vio-
lating the very stringent laws regulating
short sales and foreclosure consulting in
various states.
In my own case, I’ve spent my busi-
ness as a fearless bull rider: but in this last
Rodeo, I’m sticking to riding milk cows.
I won’t set any records or win any prizes;
but I’m a lot less likely to get thrown of and
have a horn poked up my rear end (… this,
is, by the way, an analogy … not a good one,
I agree, but an analogy none-the-less).
One of the most often violated of the
many regulations being put on the books
as of late has been that of taking money
the client wasn’t informed and was told,
“We’re working on it…be patient,” while
the monthly payments continue.
Another big one, and one that is proba-
bly most tempting but also most deadly for
REALTORS®, is the situation wherein the
investor/REALTOR® has already lined-
up a retail buyer who is ready to take the
property at its true market value following
the short sale acquisition by the investor.
When the scheme comes to light, the con-
tention by the lender in these cases is that
if the property were worth more than they
were told in the transaction, there would
have been no need for a short sale and their
resultant loss. They see such schemes as
blatant bank fraud and have no sense of
humor in such cases. As a matter of fact,
two REALTORS ® in Massachusetts were
recently sentenced to five years in prison
each for having used this scheme several
times.
So the long and short of it is…kind’a
like Henny Youngman was one to say: “If
it’s gonna hurt when you go like that … for
cryin’ out loud, don’t go like that!”
Today’s short sale market is burgeoning.
Continued on pg. 29