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David's Short Sale Education Short Sale Workshop Basic Online Course Plus LIVE ZOOM Workshop - Friday Nov 12th 7 to 9pm cst - Saturday Nov 13th 9 am to 5
David Randolph Real Estate Investor
LEARN THE BASICS YOU need to start buying SHORT SALE HOUSES MAKING $50k to $150k PROFIT PER HOUSE Learn Exactly What A Short Sale Is And Is Not And What Others Won’t Tell You… Learn My Methods Telling You How To Find Ready To Go Short Sale Clients… Learn How To Market To Them To Get Them To Call (A Must)... Learn How To Talk To The Seller And Convince Them To Allow You To Do A Short Sale And Sign The Proper Forms… Learn What Houses Not To Do A Short Sale On In Today’s Market… Get The One Form You Need From The Seller That Allows You To Take Control Of The Bank And The Seller In The Short Sale Process… Get My Email Template That Secures The Sellers Cooperation In Signing The Proper Form… Learn About My One Marketing Letter That Starts It All Off… PLUS SO MUCH MORE!
For more information
www.MAREI.org/DRShortSales
what's coming up 12
October 12th, MAREI Monthly Meeting Get the low down on how to make $50 to $150k profit on a house by purchasing through Short Sale, with guest David Randolph. Networking at 6, Market Update at 7:00 and Presentation at 7:20pm. (IN PERSON)
21
October 21st, MAREI Virtual Networking, Join us on Zoom to Network Round Table Style. Turn on your camera, be ready to turn on your mic & join us to share your elevator pitch.
09
November 9th MAREI Meeting How to start with flipping and BRRR and to generating passive cash flow with Apartments as a Limit and General Partner. IN PERSON
12
November 12th & 13th - David Randolph's Short Sale Basic Live Class on Zoom.
See MAREI.org/Calendar for more events across the Kansas City Metro from the local landlord groups and events hosted by MAREI Members.
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M A R E I
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B L O G
M O R T G A G E
M A R K E T
Time to Learn How to Short Sale
ARTICLE marei.org/why-now-is-the-time-for-short-sales/
Our October Speaker, David Randolph
The Washington Post reports in August
out the best ways to distribute the
has been reaching out to homeowners
that a tsunami of deferred debt is about
money. And like many of the programs
in foreclosure in St Louis for the past 11
to hit homeowners no longer protected
put into place during the great
years to help them sell their homes
by a foreclosure moratorium. “Over half
recession, most of the people they were
through a short sale when they are
a million homeowners had exited
designed to help don’t even know they
underwater. He has been quietly
forbearance by June 15 but were still
exist.
reaching out to borrowers all during
delinquent, according to Black Knight
COVID and he has been finding that
data, probably because they reached
DS News reports in August that
the lenders are super eager to work
their maximum allowance of one year.
Foreclosure Rates Hold Steady. “A data
with him to help his sellers sell via a
(Some services allow forbearance plans
set reflecting July, the last month of a
short sale. It’s not so much that there is
of up to 18 months, others 12.) Almost
federal government moratorium on
going to be a HUGE Tsunami of
200,000 of them had not made
foreclosures, showed a total 12,483 U.S.
Foreclosures, but that as they exit
arrangements with their lenders for
properties with foreclosure filings—
forbearance plans that they are going
repaying the debt or modifying their
default notices, scheduled auctions, or
to be hit with huge debt and the
loan.”
bank repossessions. The report from ATTOM indicated a 4% decrease in July
government is directing the lenders to help them through all the different loss
And while Congress has created many
compared to June but a 40% increase
mitigations options available before
different assistance programs to help
from the previous year. It also showed a
they proceed with foreclosure. And
renters with $46 Billion in assistance
5% month-over-month increase in
Short Sales are one that many who are
and homeowners with $10 billion, these
completed foreclosures in July.
underwater will need.
programs are moving very slowly.
Foreclosure volume remained minimal,
Funds are not getting to where they
but what will happen sans those
August Reporting from the Experts
need to go and many of these programs
government protections for borrowers
on Mortgage Data
are expiring before anyone has figured
in place??
“Indeed, a report from Black Knight highlighted the “staggering” challenges that industry professionals face throughout the remainder of 2021 and stressed the “critical” importance of “effective loss mitigation efforts and automated processes.” September Reporting on Mortgage Data
In September, BlackKnight Reports that With Moratoria Lifted, Foreclosure Starts Edge Higher, But Still 80% Below PrePandemic Levels; Delinquency Rate Falls to 4% For First Time Since Early 2020 “Serious delinquencies — including those in active forbearance — fell by 108,000 from July and, though down by more than 1 million from last August, are still roughly 930,000 above prepandemic levels. Despite the increase — which was driven primarily by restarting the process on loans that had been in foreclosure prior to the moratoria — start volumes remain 80% below August 2019 levels.” Look for their most recent data to come out Monday, October 4th. Consumer Protections Put in Place
Part of the reason we are not expecting a huge tsunami of foreclosures is that homeowners have been able to refinance their way out of not being able to afford payments in the past year. They have also been able to sell their homes at record prices. And last, the powers that be learned a lot during the Great Recession and have done everything in their power to make sure we don’t end up in a similar mess. CNBC reports that one item that has been put in place by the CFPB is protection for struggling homeowners. These protections are there to help homeowners avoid foreclosure, but will not ban them.
“About 2 million homeowners are still in some type of mortgage forbearance amid the health and financial fallout brought on by the Covid-19 pandemic. While the U.S. government extended the foreclosure moratorium through July 31, the Consumer Financial Protection Bureau isn’t planning to put any further bans on foreclosures in place.” “Instead, to help homeowners who are behind on their mortgages and facing the end of their forbearance programs, the CFPB on Monday finalized a new rule that will establish three main safeguards that loan servicers will need to undertake before starting any foreclosure process.
What is Loss Mitigation
We have seen this term mentioned several times and that lenders are to pull out all the stops to find ways to help the borrower before they can proceed to foreclosure. But just what does that term “Loss Mitigation” mean. We turned to the Consumer Finance Protection Bureau the CFPB to find the items that the lenders must attempt through their loss mitigation efforts: Forbearance: Letting the borrowers skip payments to give them time to figure out
The new rule will go into effect on August 31, 2021.”
how to pay, with the payments becoming due in some way at some point . . . right now that point is starting for many.
The CFPB will put the following protections into place for borrowers who are more than 120 days behind on their
Repayment Plan: The lenders negotiate with the borrowers who have been in forbearance to negotiate a plan to pay off
mortgage payments to ensure that they have the opportunity and the time to avoid
those missed payments.
foreclosure:
Loan Modification: Changing key aspects of the terms of the loan such as
1. Before any foreclosure can start, a loss mitigation application must be completed and submitted by the borrower and
interest rate, term, how to handled missed payments, and more, all in an effort to keep them out of foreclosure.
thoroughly reviewed by the loan servicer. If borrowers are still unable to make
Deed in Lieu of Foreclosure: Simply
payments after exhausting the foreclosure avoidance options, the foreclosure process will be able to proceed. 2. Loan servicers need to confirm that a property is abandoned under local and state laws before starting foreclosure proceedings. 3. Loan servicers need to make reasonable effort to reach borrowers before starting any foreclosure proceedings. If the homeowner is more than four months behind on their rent and unresponsive for more than 90 days, then the process can move forward.
allowing the borrower to deed the home back to the lender so they don’t have to actually go through foreclosure to get the home back. Short Sale: Allowing a homeowner to sell their home, pay off any debt tied to that home, including the mortgage in question, and pay all the costs associated with selling that home-like real estate commission and title company fees all for less than what is owed. So Why Short Sales Now?
With all these folks coming out of forbearance plans and their lenders being
directed to bend over backward to make sure every option available to the homeowner is presented before they foreclose, short sales are going to be a key tool. Sure a lot of folks will refinance or sell outright. Many more will come up with payment plans. But for those that are underwater or that were in foreclosure prior to us even learning about COVID, getting foreclosed on or selling their home through a short sale are going to be their only option. And to go back to the report from DSNews: Indeed, a report from Black Knight highlighted the “staggering” challenges that industry professionals face throughout the remainder of 2021 and stressed the “critical” importance of “effective loss mitigation efforts and automated processes.” Note that one form of effective loss mitigation is a short sale. Major metros tracking the highest volume of REOs in July included Kansas City, Missouri; Chicago, Illinois; Baltimore, Maryland; New York City and Philadelphia. Learn More about Short Sales
Here at MAREI, we have not presented Short Sales as a way to acquire property since, well, we can’t quite remember back that far. But in today’s real estate and mortgage industry, right now seems to be a good time to start. Not because of a huge wave of foreclosures coming, just a mini wave in the grand scheme. But rather because of the huge wave of efforts to help borrowers avoid foreclosure. That’s why we have invited David Randolph to join us at the October 12th meeting. If you missed this meeting, members can access the replay from our calendar of events..
M A R K
G A N N A W A Y
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M A R E I
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B L O G
End of Self Directing? The US House of Representatives’ Ways and Means Committee has suggested changes to the Self-Directed IRA process that would functionally eliminate them. The 80% reduction in access to capital and limitations on types of investments favors Wall Street over Main Street, hampering entrepreneurs from accessing local capital. What are these new IRA rules in the Infrastructure Bill?
These are rules that according to the media that were directly written to stop Peter Thiel and others like him from starting a tax-free Roth IRA account with $500 and then through smart investing turn it into millions or in the case of Peter Thiel billions. Wait, what? Who is Peter Thiel?
He’s the guy who co-founded PayPal and according to Wikipedia a billionaire venture capitalist. Think a big hedge fund guy who knows the rules and uses them to his advantage to build and amass wealth and according to CNBC, the changes are all in direct response to Peter
Thiel and would force him to withdraw all but $20 million of his Roth IRA, reportedly valued at $5 billion. Where Can I Take a Deep Dive into the Changes?
If you really want to dig in and read the 800 plus pages you can Download the Bill or if you want the short version you can Download the Congressional Summary. Or, if you want an educated person’s review of the bill, you can visit Real Estate and Tax Attorney John Hyre’s website HandsOffMyIRA.com. For those with retirement money in a Self Directed account, be sure to check in with your custodian on their website and social media, they quite possibly have a call to action for you to take to send a message to the right people in congress. Why YOU Should Care About These Changes to Self Directed IRAs
very quietly and very quickly., without telling you. But why should you care? Vena Jones-Cox shared the following on Facebook and she explains it well: What it does is stop YOU from partnering with your spouses’ IRA to buy a rental. It stops your IRA from owning an LLC that owns that little rental. Buh BYE asset protection. It stops you from doing 50/50 JVs where your IRA provides the money and your fellow member provides the deal and the work to rehab it. Your IRA won’t, in fact be able to own more than 10% of any entity (and a JV is an entity) It stops your IRA from putting $10,000 into an investment in a personal property trust that owns a $70,000 hard money loan that lets you get a 12% return for a while,
The Democratic House is looking to gut self-directed retirement accounts (especially IRAs, possibly 401(k)s and Solo 401(k)s), and they are attempting to do it
because the IRA would then own more than 10% of that entity. Don’t have $70k in there to take down the whole note yourself? Sorry, Charlie. That investment isn’t for you, it’s for someone with more
1 8 | A D V O C A C Y money socked away. Forget those sweet apartment PPMs, too; they almost all require YOU to be accredited or sophisticated in order to invest. The new law says that not only can your IRA not invest in that sort if thing; you’ll have to DIVEST yourself of them in the next 2 years (no grandfathering here, for the first time in history) or the IRS will do it for you and charge penalties. That’s OK, I’m sure the sponsor can just sell off $100k of the million dollar total investment–maybe 5 of those units–to pay you back and get you into compliance. This of course means that if you use OTHER PEOPLE’S IRAs as partners, funding sources, etc. your life is about to get a lot more difficult. You’ll need FIVE PEOPLE’S IRAs to do a 50/50 JV on a rehab. And there’s a word for that–it’s called a security. And you can’t issue it. And in an email from Real Estate Investor, IRA Expert, and Attorney Jeff Watson: Some in Congress are asking the rest of America to pay as a result. They want to statutorily limit the amount of money one can accumulate in their retirement account. They are asking America to pay by taking away the opportunity to convert traditional IRAs to Roth IRAs. They are asking America to pay by limiting the investment choices and opportunities that we as investors and entrepreneurs have. They are forcing us toward only Wall-Street-type investments – stocks, bonds, mutual funds, ETFS – and away from private capital, away from non-publicly-traded securities, away from IRA-owned entities, and away from all the other things we do to help keep Main Street functioning. And if you syndicate or you invest in some sort of syndicated investment we have this from the attorneys at SyndicationAttorneys.com
For self-directed IRA account holders, the proposed legislation would prohibit IRAs from holding privately placed equity and debt securities and other investments that require the IRA owner to meet certain minimum financial, educational or licensing requirements. For example, the legislation would prohibit IRAs from holding unregistered investments that are offered to accredited investors, like equity or debt investments in small businesses or investments in private funds. Specifically, the legislation: Prevents IRA investors from accessing your offerings, thereby negatively impacting not just your business, but the ability of small and other businesses to raise necessary capital to grow and provide jobs to everyday Americans. Will artificially drive down the price of your investments by requiring all IRA owners to sell or distribute existing investments by a publicized date certain. Negatively impacts the ability of Americans to save for a secure retirement by limiting choice and their ability to diversify retirement savings outside of the stock market. What Can I do about this? I’m Just One Person?
Sure you are just one person, but if you combine efforts with a friend, you become two people. Both of you partner with us here at MAREI and you become 500 people. And we partner with National REIA and become 1000s of people. And then we all partner with Self Directed IRA Custodians, Hedge funds, and other large and small businesses that will be affected by this and well, we stop this cold. We have a couple of calls to action that only take a couple of minutes. All you
need to do is enter your name and contact information, then edit the message to personalize it, and then send it. See links to for several calls to action by reading this article online at: MAREI.org/call-to-action-stop-thesuggested-changes-to-self-directed-iras
At the link above we also have a presentation by John Hyre explaining the issues and he has even more detailed ways to reach out and let Congress know this proposal is bad on his website at www.HandsOffMyIRA.com I’m Too Busy . . . Let Someone Else Do This.
You can stand by and do nothing…and pay the price, literally. Or you can fight. To protect your retirement (or the funds that feed your business if you raise money from SDIRAs/401(k)s), you will need to fight promptly and loudly. Procrastinators are useless in this fight. Send Letters, Send Faxes, Make Phone Calls – MAKE NOISE
We have two sample letters that you can download and edit to send to your own representative: Letter to Representative 1 and Letter to Representative 2 . If you are not sure of the contact information of your Representative you can click here to look it up using your address. If you live in Arizona, California, Florida, Georgia, Hawaii, Illinois, Maine, New Jersey, Oregon, Tennesse, Texas, Virginia, we really need to take some extra steps to call and send letters to a very specific list of moderate Democrats. (And please make sure all your friends in your district call and send letters too!) Thank YOU in Advance!!
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