The DOS (due on sale clause)

[mtnwizard]

John & Bobo,

I am reposting this from another thread for you.  TRY THIS:

How smart is your right foot?

This will boggle your mind and you will keep trying it at least 50 more times to see if you can outsmart your foot... but you can't!!!

1. While sitting at your desk, lift your right foot off the floor and make clockwise circles with it.

2. Now while doing this, draw the number 6 in the air with your right hand. Your foot will change direction!!! = There is nothing you can do about it.

Just a little item to show us all that we are just human (guru or not), no matter how smart we THINK we are.

Have a nice day.                

Da Wiz

[$Cash$]

Da Wiz

P.S. - Great post, John -- I had lost that link.

Gary,

In your line of business isn't that called the "Waffle Effect"  :

John $Cash$ Locke

[thailanddave]

This may be the wrong website for me. I did learn a lot when you guys stay on subject. When you argue who is more qualified to give advice because you can twirl your foot in a circle or even because who has done more deals does nothing to educate anyone.

First, I think the trust is pure genius. It eliminates a lot of the areas that can cause trouble, ie the DOSC, creating liens on the property etc.  It does it legally. What I don't like are the fees NAR charges.

If Bobo doesn't think they will ever be called thats his business. I think his post was just asking for validation of how he thinks things should work and not really interested in really protecting himself. It may be interesting for someone to explain what happens when the loan IS called due and you have already taken $5000 from a buyer on a lease/purchase.

I do point out that in every stock market bubble the investors say "Oh its different this time". You can't find a period of more foreclosures than the S&L scandals of the late 80's. I'm in the industry, so if I thought there was no risk, I wouldn't bother worrying about it. If anything, this time they will call more loans due to try to avoid the situation before. There are many more computer modeling programs available now, much more forced disclosure by the banks and probably more actuaries working in our business than any other except insurance. Why do you think its possible to get a NO Money down, stated income/stated asset loan with a credit score down to 600? Somebody figured the odds somewhere. Its much more sophisticated now and the smart thing to do is to move the properties off the balance sheet and onto the investors.  IF a guy outside the industry thinks there is no risk, let him go on his happy way. There is nothing anyone can say that will change his mind. I am in the industry and there is nothing you can say that will change my mind about the danger of a bank calling the loan due.

Couple of other points. Although a NAR is legal, pointing out that it is part of a DRE (Department of Real Estate) continuing education program does not make it a legal program. You can get approval to teach a continuing education program about fraudulent practices too. All you have to do is type up your class and submit it to the DRE for approval. Anything that will help a real estate professional know more about the business. A CE does nothing to validate or invalidate a program.  

Having someone at Countrywide recommend someone does not in itself mean countrywide endorses a program or someone should try to avoid the DOSC. If it is/was someone in the legal department or upper management, it carries some weight. I guarantee they would not knowing advocate a way to circumvent a legal clause written into their contracts, deeds of trust etc.

Countrywide, and all other lenders, employ salespeople called loan officers. Asking a loan officer whether something violates the dosc is closely akin to asking the cashier at walmart whether its legal for Kmart to have tennis shoes made in a sweat shop in China.

You guys posess a wealth of information but in your quest to prove who knows more, it gets clouded and twisted. I have learned a lot here in a short time, but I have started to question the validity of it due to the bravado that accompanies it.

[thailanddave]

How much is 2% of that again?

[thailanddave]

Somebody correct me if Im wrong (like I would have to ask) but landlord insurance appears as a rider on the home-owners insurance policy and is more expensive than a normal resident owners policy because it covers liablilities arising from tenancy in addition to the destruction of property due to fire, acts of god, etc.

If you are suggesting that they cancel the original insurance policy that names the lender as a payee, you will most certainly attract the attention of the bank. They will be notified as soon as the insurance is cancelled  since the note is no longer secure.

[mtnwizard]

Dave,

In the case of my own home, I converted my homeowners ins to landlord ins and the difference in cost was negligible.  Ironically, my owner occupied loan was with Countrywide.  I called a "loan officer" and told him exactly what I was doing, i.e., placing a tenant in the property on a triple net lease who would be making the payments.  

I quoted Garn-St. Germain and he was pretty arrogant about the whole thing.  I told him to review it with his legal dept and get back to me.  He didn't return my call so when I finally reached him he reluctantly agreed that their hands were tied relative to the DOSC.  Just thought I'd relate a real life experience.

Da Wiz

[BoboTheKing]

And regarding a previous posters question....sorry, I'm too lazy (by choice) to look back....if there is a deal I take sub 2 and it appreciates enough to give the lender a reason to call it due, and they do, I can guarantee that property will be refinanced so fast their heads will spin, one way or another. I will protect my buyer. If you think outside the box, you will get things done. If you or your buyer have credit that isn't good enough, and the deal has that much equity, get someone who has good credit to help you, and pay them out of the equity.

In any business, you will have obstacles. If you think through things, you will be successful.

The above is what I will do if a lender wants to call a loan due. They won't call one due with low equity unless rates skyrocket. If something happened and I could not refinance, I would definitely protect my buyers interest.

I stand by what I said. There may be some loans called due here and there, but I have never read, seen nor had proven to me that it is anything beyond a slim chance. I am open minded and if anyone can prove this wrong with facts or numbers, I would be more than glad to retract this. All I know is the DOS is not an issue for me. If anyone wants to worry about it, go ahead.

I also agree somewhat about the NARS trust. I am not at all against trusts, but the cost is too high. I would rather put the money in my pocket than build a moat around my properties. Those that wish to use it, go for it. For low equity sub 2 deals, I don't feel a need to use one, nor will I be concerned about the DOS.

Don't put words in my mouth and say I am looking for validation about the DOS. I am not. If there are statistics to prove my opinion wrong, I'd like to see them. And I am only talking about deals where title transfered and payments were kept current. Any other situation, such as falling behind in payments, is irrelevant to this. I just want to see some facts. I have never seen anything to prove otherwise. The fact that you work in the industry and just say it is so, isn't good enough. I will never change my opinion about this unless there is some documented proof that tells me otherwise.

Good investing.

[$Cash$]

If this is a risk vs reward business or the lower the risk then less the reward, even Gary will agree, when he posted his way vs my way, I just about doubled my gross profit on same deal.

So if the DOS becomes an issue then I will re-evalute, but really I am not concerned this will be an issue when all those ARM's, No Interest and Balloon Note Loans the lenders have been doing start coming do, talk about full plates the lenders will have plenty to worry about other than calling a performing loan.

Just check out what is happening with foreclosure's today give it another 6 months and see how full the lenders plates are.

John $Cash$ Locke

[mtnwizard]

John,

You said, "If this is a risk vs reward business or the lower the risk then less the reward, even Gary will agree, when he posted his way vs my way, I just about doubled my gross profit on same deal."

No, John.  The only reason you had a slightly higher profit was because I chose to share my profits with everyone in the transaction. I gave the seller $17.5K more dinero than you, and I shared future appreciation with my tenant.  WIN/WIN/WIN.

I realize being cutthroat is good business so get all you can.  I choose to SHARE, make friends, and create good karma.  It's just a matter of preference.

Peace.

Da Generous Wiz

[$Cash$]

Gary,

John,

You said, "If this is a risk vs reward business or the lower the risk then less the reward, even Gary will agree, when he posted his way vs my way, I just about doubled my gross profit on same deal."

No, John.  The only reason you had a slightly higher profit was because I chose to share my profits with everyone in the transaction. I gave the seller $17.5K more dinero than you, and I shared future appreciation with my tenant.  WIN/WIN/WIN.

I realize being cutthroat is good business so get all you can.  I choose to SHARE, make friends, and create good karma.  It's just a matter of preference.

Peace.

Da Generous Wiz

Thirty One Thousand Dollars ($31K) in profit is a "slightly higher profit" than you make on the same simple deal?

You keep on being the sweet sensitve person you have been when someone ruffles your feathers on this board, what did you tell the one poster "Kiss My A" when you disagreed with him, no wonder you need to share, make friends and lose money.

Let's face it just like lease options, your way is the same, only when you grow up and find out it is just as easy to get the deed, then you will start making the kind of money investors deserve to make when doing creative real estate investing deals.

If you further need to share then take the profit you make on a real deal and give it to a good cause like St. Judes, Salvation Army, etc,. at least now you have given to some worthwhile causes, where you will make thousands of new friends very happy, rather than two people.

John $Cash$ Locke

[mtnwizard]

What about taxes, John?  Under your scenario, you sold with a land contract so you are subject to an immediate tax crunch.  Not so with the trust.  

Also, you only gave the seller "U-Haul" money, illegal in California.  Anyone could do that and make their deal look good.  My deal made money for seller, buyer and myself.  Your deal the old greed glands are pumping.  Are you just going to delete this post again?

Da Wiz

[$Cash$]

Gary,

No, I am not going to delete your post, as your are showing signs of paranoia.  In most posts you are giving legal advice pretending to be an attorney, called me Locke in one, which showed an underlying frustration, repeat yourself in almost every post, so now I will get serious.

I believe that from all those years of counseling from what I understand people in your profession are the ones most likely in need to see a "shrink" themselves.  I am beginning to wonder if you were not the one being counseled for 30 years.

Seek competent help in all seriousness, before you are "babbling" in rubber room somewhere other than on this board.

John $Cash$ Locke

[BoboTheKing]

What about taxes, John?  Under your scenario, you sold with a land contract so you are subject to an immediate tax crunch.  Not so with the trust.  

Also, you only gave the seller "U-Haul" money, illegal in California.  Anyone could do that and make their deal look good.  My deal made money for seller, buyer and myself.  Your deal the old greed glands are pumping.  Are you just going to delete this post again?

Da Wiz

What a shock...more "scare tactics". So now it's illegal in California....damn, there are sure a lot of criminals running loose in your scenario.

You can choose to give away your profits to the seller and buyer. That is fine. I would think most are in business to make money, not throw it away. Or are you going to say this is unethical too. The implications that investors who dont use your NARS are greedy is ridiculous. And that is exactly what you are inferring, whether you directly say it or not.

Your scare tactics (especially with the DOS and some bogus laws), and your accusations of unethical business and equity stripping will not convince any intelligent people to use the NARS. Considering you are doing this on multiple forums, it's pretty easy to see your game. It isn't working very well.

[mtnwizard]

Batman and Robin are at it again.  JCL cannot even address the issues and Bobo continues to play the same old record.  In case you didn't understand as usual, I was referring to the strict laws in California re pre-forclosures.  Give "U-Haul" money and go to jail.

Here's an email I received in response to my warning that with the rise in interest rates, the DOSC will become a serious issue:

"Speaking from first hand experience lenders do enforce DOSC - had this happen to me.  Rates at the time were 7.5 to 8% - loan on the property was at 10% and the lender called the loan.  So this does happen, just wait until the rates pop, then tighten your seat belt."

TS


As to JCL, you had deleted the post and I complained to the higher ups.  I don't give legal advice and have NEVER pretended to be an attorney or anything but a retired rehabilitation counselor.  You understand nothing about my profession and have clearly demonstrated that.  In addition, unlike other gurus who post their education and experience, for you I see no education, and experience in "radio and television".  Now there are some heavy credentials.  And, WHAT ABOUT TAXES? I post on the issues, you attack personally.  That says a lot!

 

**********************************************

P.S. - Since you seem so interested in my counseling career, click here:

http://garymialocq.tripod.com/gmcsvocrehab/id17.html

Thanks for asking.

And while you are at it, you may as well have the names of the businesses/public agencies who have paid me as a private consultant:

http://garymialocq.tripod.com/gmcsvocrehab/id13.html


Super Wiz  8) 8) 8) 8) 8) 8) 8) 8) 8) 8) 8) 8) 8)