In recent Newsletters I have talked about how much fun our business is right now. Activity is up, more notes are being created, more notes are being sold, sellers are getting the cash they want, and brokers/buyers are finding quality notes to add to their portfolios.
However, in my conversations with note sellers, I am alarmed by the fact that many of them are not aware of the new rules governing seller carry back transactions. Some of these sellers are operating in a vacuum, unaware that the old days of the Wild, Wild West have a new sheriff in town – the Consumer Financial Protection Bureau ( CFPB). As a direct result of the mortgage meltdown, new rules governing behavior by major lenders has trickled down to you and me – Big Brother is looking over our shoulder.
More importantly, as is typical of government, there is a huge misunderstanding of exactly what a seller carry back transaction is and isn’t. Simply, the government believes it to be a loan, and thus lumps our transactions in with those of major lending institutions. We know our transactions are not loans – they are installment sales.
You need to know that threats to the health of our industry exist, and that your ability to sell a property and carry back a note could be in jeopardy. You also need to know that a small group of folks are working on your behalf – and mine – to allow our little niche in the real estate market to operate and thrive and play its proper role in helping people buy properties. These folks meet with and attempt to educate the C.F.P.B about our business practices and how they differ from banks and lending institutions. They need our support.
May I ask you to take a few minutes and do the following:
1. Visit www.SaveSellerFinancing.Org
2. Read the White Paper for a better understanding
3. Sign the petition to save seller financing
4. Donate
I have signed the petition and make an annual contribution. If you work in our industry, hope you will consider doing the same.
“The only people who never tumble are those who never mount the high wire.”…… Oprah Winfrey.
Spring Fever
Here are some recent housing updates:
1. Foreclosures down 67% in February from the peak in 2010. 1.4% of all homes with a mortgage are in the foreclosure inventory as of February 2015……CoreLogic.
2. Home builders are positive. The National Association of Home Builders Housing Market Index rose 4 points to 56 in March. The index measures builder confidence and readings over 50 are seen as positive. Housing starts in March were higher than February( heavy snow caused big decline ). There were 926,000 starts – average was 1.5 million for the 20 years leading up to the housing crisis……MMG Weekly.
3. Existing home sales in March surged by 6.1% from February to an annual rate of 5.19 million units. This was the largest monthly increase since December 2010. Sales are also up 10.4% from one year ago…… National Association of Realtors.
“You’re never too old to learn something stupid.”…… PonderBits.
Taxes
Top corporate tax rates in 2014 among major developed economies(38 countries):
United States 35%
France 34.4%
Belgium 33.9%
Australia 30%
Mexico 30%
Portugal 30%
Spain 30%
Japan 28.1%
New Zealand 28%
Italy 27.5%
Others: United Kingdom, 21%; Germany, 15.8%; Canada, 15%; Switzerland, 8.5%.
Notes on Notes
1. Several of you are creating notes with a “0%” interest rate. Why? You are helping a friend, you like your buyer, you want the terms to be good for him, etc. That’s fine, but, you are potentially hurting yourself. A few of you have sold those notes with me this year and your pricing suffered as a result. If you want to offer 0% and feel you donot want to sell the note eventually, negotiate the biggest down payment possible and shortest amortization period possible.
2. Who is a good candidate to offer a seller carry back?
a. First time buyers wanting to get into the housing market, but need financing options.
b. Buyers with “credit ding”, but are in good financial shape otherwise.
c. Buyers who usually pay cash, resulting in little or no credit history.
d. Buyers who just “want in” on a real estate transaction, but can’t get a bank loan.
Good buyers are out there and we can help them.
J. Robert Eckley, Eckley & Associates, www.EckleyLaw.com.
