Uncle Sam Wants to Fund Your Next Real Estate Deal!!!!

Uncle Sam is (almost) always your “silent partner” on the “back-end” of a successful real estate deal: He always wants his taxable share of the profit generated by your hard work.

Would you like to change the equation just a little and have Uncle Sam be your money partner near the “front-end” of your deal, and not just at the end?

Yes, I know most real estate investors usually don’t want this particular Uncle to be anywhere near their deals. And I don’t blame them. But wait! Don’t stop reading just yet. It’s not so much that Uncle Sam wants to help you do deals; rather, if you’re a Note Investor, he wants to help your homeowners, you know, the good folks who own the homes that are secured by your Notes. You, my friend, are just an unintended beneficiary of your good Uncle’s largesse.

What am I talking about? I’m talking about the Hardest Hit Fund.

According to the Department of the Treasury, Hardest Hit Fund (HHF) is a component of the “Troubled Asset Relief Program [TARP], [which was] created to implement programs to stabilize the financial system during the financial crisis of 2008. [TARP] was authorized by Congress through the Emergency Economic Stabilization Act of 2008 (EESA) and is overseen by the Office of Financial Stability at the U.S. Department of the Treasury.”

“First announced in February 2010, the Hardest Hit Fund provides $7.6 billion to the 18 hardest hit states, plus the District of Columbia, to develop locally-tailored programs to assist struggling homeowners in their communities. On February 19, 2016, an additional $2 billion was allocated to HHF as a part of the Consolidated Appropriations Act, 2016. The total HHF allocation is now $9.6 billion.” (Emphasis added.)

“HHF programs are designed and administered by each state’s Housing Finance Agency (HFA). Most of these programs are aimed at helping unemployed homeowners remain in their homes while they search for new employment and those who owe more on their mortgage than their home is worth.”

“State HFAs have until the end of 2020 to utilize funds allocated under HHF.”

What does all this mean for the Note Investor? It means, quite simply that an additional $2.2 billion was just added to the $7.2 billion which was previously allocated — for a total of $9.6 billion (much of which has not been used) — that Uncle Sam wants to give to Note Investors just like you!

Let’s look at an example:

The Property:
A single family home, located in Tennessee.
Current Market Value (CMV) of the property: $23,000
Unpaid property taxes: $3,000

The Note:
First position mortgage note.
Unpaid Principal Balance (UPB): $62,000 (Yes, this house is really “upside down.”)
Cost to purchase the Note: $8,000

Hardest Hit Fund Payments Which Benefit Investor:
Delinquent property taxes (paid to County): $3,000
Property insurance: $785
Total: $3,785.00

Hardest Hit Funds Paid Directly to Investor:
3+ years of arrears: $26,600
18 months of future mortgage payments: $10,726
Total HHF Paid Directly to Investor: $37,326

AFTER 18 MONTHS, THE INVESTOR WILL STILL OWN THE NOTE, THE VALUE OF WHICH WILL BE THE UNPAID PRINCIPAL BALANCE OWING AT THAT TIME, TAKING INTO CONSIDERATION THE REDUCTION OF PRINCIPAL ATTRIBUTABLE TO PAYMENTS.

Not a bad return on an $8,000.00 investment!!!!