TAKE ACTION AND CONTACT YOUR STATE SENATORS RIGHT NOW!!!I don't know if you've heard about HR 1728, but it's a heinous infringement on private property rights that is likely to shut down the creative selling market.
IT HAS ALREADY PASSED THE HOUSE AND IS UNDER CONSIDERATION BY THE SENATE NOW! We need massive action on this immediately to stop it.
This is another attempt by lawmakers who do not have knowledge about a subject trying to regulate it. Elected office holders blame investors for the housing problems rather than the lending institutions that contribute to their reelections funds. We cannot call them hypocrites because they support their contributors. I have another name for them... However, this may be another attempt by the banking lobby (the most powerful lobby in Washington D.C.) to eliminate competition.
Imagine what the real estate landscape would look like if banks & other lending institutions were the only providers of financing. Look how their greed got us into our present situation! And they want to be the only financing for home sales?
Our elected officials should be encouraging real estate investors to purchase, rehab & recycle the thousands of ugly, vacant & deteriorating properties. We provide a needed service and improved properties which increase tax revenue. Instead, they restrict the financing available to investors (realistically a four loan max & not resurrecting the HUD 203K program for investors) & pass legislation & rules inhibiting investors’ ability to conduct business (90 day FHA rule, 6 month minimum for refinance, reserve requirements...). And they've allowed banks to hide the fact that they have foreclosed properties on their books by creative accounting. If we were so creative in our business' accounting, the IRS would be all over us & shut us down!
They seem to believe that real estate investors are thieves and profit is a dirty word. My sister said it best, "the lawmakers have never run a business and then tell us how to run ours!"House Bill 1787 - It is Death to Your Business and What to Do About it.
The U.S. Senate is considering a bill that would severely limit the way you do business as a creative investor and, more importantly, is an inexcusable infringement of the property rights of all Americans.
HR 1728, which you can view in its entirety here:
http://www.govtrack.us/congress/bill.xpd?bill=h111-1728deals with a plethora of mortgage-related issues, mostly around limited terms and fees on residential loans. But the heinous piece of the legislation is in section 101(3)(e), which defines the affected principals as:
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(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month period, provided that such loan-
(i) is fully amortizing;
(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;
(iii) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
(iv) meets any other criteria the Federal banking agencies may prescribe; andYeah, I know, confusing. But here's what it says: you are NOT subject to the law as long as you DON'T sell more than 1 property with owner financing every 3 years! Or, to put it another way,
you ARE subject to the limitations of the law if you DO sell more than one property every 3 years via a land contract, owner-held mortgage or wrap-around mortgage-and who knows if they'll define lease/options as owner financing, too?So what does it mean to be "subject to the law"? Well, at the very least, it means that you will have to comply with a long, confusing, and penalty-filled piece of national legislation. Here are the types of transactions that you would be restricted from doing more than once every 36 months:
o
Selling YOUR OWN HOME using a land contract or owner-held mortgage so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments
o
Carrying back owner-held second mortgages on investment properties that you sello
Doing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential
Yes, there will undoubtedly by ways to "get around it" - some have suggested that getting a mortgage broker's license and then learning and following the vast new set of regulations would circumvent the "problem". But bottom line is,
this law has to be stopped and it has to be stopped NOW. Here's why:
1. Congress is trying to regulate the wrong thing. The deals we make are not "loans" - they don't involve the transfer of money, or points or closing costs or adjustable rates or any of the other things that caused the mortgage crisis to begin with. They are INSTALLMENT SALES. We don't give money to the "borrower" and wait for it to be paid back: we give a property to the borrower and wait for it to be paid off. Regulating this will have no effect on the foreclosure crisis.
2. It is a completely unacceptable infringement on private property rights. When I own a piece of property and find a ready, willing, and able purchaser, I should be able to control the sale of that property within the existing laws of my state, which already regulate the interest rate that I am able to charge and some of the terms of the sale. The government does not have the right to tell us that we need special licensing to sell our own properties; nor do they have the right to further regulate the terms under which we can sell or burden small investors with a new set of rules that we can't comply with.
Not only will this new law, if passed as written, effectively choke off owner financing as an exit strategy for you, it will also take away housing choices for your buyers. The millions of Americans who've been through foreclosure in the last 3 years can't buy a house in any way OTHER THAN to negotiate owner financing with a seller - and HR 1728 would greatly reduce the number of properties available in this way. Millions of potential home owners who would otherwise be able to re-start the process of paying off a home, and get the tax advantages of ownership, will be reduced to renting until they are able to qualify for bank financing.
TAKE ACTION AND CONTACT YOUR STATE SENATORS RIGHT NOW!!!Labels: IMPORTANT - TAKE ACTION AND CONTACT YOUR STATE SENATORS RIGHT NOW
