All Forum Posts by: Joffrey Long

I have to know. How many of the (CALIFORNIA ONLY) hard money lenders (or private money lenders, as we're now encouraged to say) are going to the CMA (California Mortgage Association) Conference Thursday and Friday in San Fran?

I'm amazed, that in a State where there are at least 2,000 people involved in organizing, funding, soliciting, actively promoting hard money loans, that only 200 show up at the conferences, which focus only on hard money lending in California.

I guess some of the others are so smart that they don't need the conference. Or they prefer to be educated by the plaintiff's bar - a much more expensive education, but definitely a thorough one.

Here's the actual question:

If you're a hard money lender, broker, organizer, solicitor, full time investor, hard money pool manager, or service provider to any of the previous categories, how are you getting your knowledge about complying with the rapidly changing laws, etc. ?

If you don't want to give away your "secret source," you could simply say, "from my one attorney," or "from a webinar I take once a year." (Which will make me laugh really hard.)

Ok, hope I didn't step on any toes here. I know there are a few BP'ers who, like me, have already admitted they don't know everything and will be at the seminar.

Looking forward to your feed back ! And remember, this is a CALIFORNIA question for people in hard money lending in CALIFORNIA. Other states are welcome to comment, but I don't know a thing about lending in states other than CAL, and I have no idea what trade associations or sources they have.

thanks again, y'all,

Joffrey Long

You should be able to get longer term hard money today. 10 years or so.

Go to a local trade association in your state. The state you live in has highly advanced hard money lending distribution systems and a lot of California exiles who know the business and have lots of money.

At a local lender's trade association you'll find out who the real players are. There are tons of people who want the higher returns and are smart enough to realize that a 10 year loan can be an excellent investment.

Joffrey Long

And one more thing: I forgot.

I would also recommend against giving TILA disclosures in cases where the loan isn't really a TILA loan. The theory of "giving the TILA disclosures as a precaution and for good measure" could backfire. (No good deed goes unpunished.) But here's why:

In this world of Consumer Financial Protection Bureau and and the fight against "Unfair and Deceptive Activities and Practices (UDAP), giving the TILA disclosures could lead you into a confusing and hard to defend situation. I'd only give them when they're due. If a loan is confusing, dig deeper and find out if it's a dog or a cat, a TILA loan or a non-TILA loan.

Hans,

For TILA, it applies to the following:

1) It applies to extensions of credit where the borrower is a CONSUMER.

A consumer has to be a "natural person" which eliminates LLC's and other entities, except for trusts that are family trusts or merely a legal extension of a consumer's person that primarily functions in the same manner as the consumer.

2) It applies to extensions of credit for CONSUMER purposes. So, where I personally qualify as a consumer when I'm buying a house to live in, for example, if I'm buying an investment property, even if I buy as an individual, it's not a consumer transaction.

3) It only applies to lenders who are CREDITORS. Ok, what's a creditor? I do not agree that it just applies to individuals who "are in the business of making loans." The definitions get more complex here, and some individuals who are not in the business of making loans may still be found to be creditors. You will have to look this one up. Google "Truth in Lending Act" and the look for "Definitions" and read the definition for "Creditor."

Hans, don't believe a word I say or take action on what I recommend, except for this recommendation that you seek qualified legal counsel on this, before making any decision.

I will also advise that you cover yourself against (untrue) claims that a loan was NOT for business purpose and was for consumer purpose, even though something in your lender paperwork said it was for non-consumer purpose.

Hope all this helps. Again, check with people who are qualified to give you advice. This is all just to provoke questions and get you doing your homework.

And by the way, you ask many really good questions, in my humble opinion.

Joffrey Long

P.S. To Sandy Blanton's earlier questions, I gave my opinion of part 1, but part 2 of your question, "what are the penalties?"

The answer is, that there is first the penalty of rescission. Rescission is where, even 2.5 years after the loan is made, the borrower simply pays back the principal only and all interest, points and other finance charges are refunded to borrower.

There are conditions to rescind, ( whew, spelled that right) so you have to look those up, and there are other penalties too, for failing to provide the TILA disclosures.

One interesting thing in the HUGE world of borrower litigation, many borrowers do not raise TILA claims as much any more, due to the fact they prefer to stay in State Courts (TILA being Federal) where the atmosphere may be more friendly to anti-lender litigation.

Fran Flanagan

Thanks for your post. Great thoughts. YES, some people can't use a camera, can't complete a decent post, but I guess they're reducing competition for our postings.

But don't forget .... all those photos of bathrooms with the toilet lid not closed. It would not occur to me to post a photo of a toilet with the lid up.

I guess it's just one of those things that I'm "not meant to understand."

My first mentor in real estate investing, and the guy who gave me some of my first breaks and taught me lessons I still value 40 years later, left our world a couple of weeks ago.

Not famous, not well known, but John Trendtel of Northridge, CA. will definitely be missed by those he influenced and helped.

Thanks, John, for everything.

Joffrey Long

"Back to Back" turns: What I mean is, tenant Frank gave me 30 days notice and is leaving on May 1, I'm already showing the unit and I'm hoping to line up the next tenant to move in about a week after Frank leaves, just giving me time to ready it for the next move in.

I've done this a lot, and now have a clause (addendum) to my lease that requires tenants to cooperate with showings when they give notice.

Granted, it doesn't work sometimes if your present tenant is a "piggy," but sometimes it has been smooth, and tenant A leaves on Saturday, we're working the next 5 days, and tenant B moves in the next Saturday.

I generally go lower on my rent (by 5%) from market as it's worthwhile to get someone in faster rather than wait for higher rent, but overall, I'm thrilled with the results so far, where I've been able to make it work.

Would like to hear feedback, thoughts on this.

(I'm in a "hot" rental market in LA, Orange, and Riverside Counties in Southern California. I realize this theory might not work in some markets.)

Joffrey Long

Sam,

Thanks again for taking time to reply. That's useful. Also, appreciate your sharing results of what appears to be careful recordkeeping.

And congrats on getting the thing rented!

Joffrey

I agree with the "fix it" crowd.

Problem I've always had is that there's a "expert / in the business" price to get stuff done, then there's the "scary eyed worried homebuyer" price.

Your price might be $6,000 to get it fixed, but people go in and have no idea, think it costs 3 times more than it does, and if the contractor knows how scared they are, it will. Then they talk to their friend Edgar, who used to be a room addition contractor in the 80's but still knows everything, and he starts telling them all the other problems that could be there.

Next....... well you get the picture. Please get it fixed.

Joffrey Long

Cody C.

That's really interesting, what you shared about the author's theory.

Here's what I've observed over the years:

In a rising market, closed comps only show you what prices were negotiated between buyers and sellers in negotiations that occured between 30 and about 220 days ago. You're right, in that those properties are not part of today's buyer's selection of homes to choose from, and therefore, aren't really impacting the negotiations of today's buyers and sellers.

Except, that appraisals may be a problem if you negotiate a price higher than the comps.

I've always felt that in a rising market, closed comps tend to bracket the lower end of what value might be, while available/unsold listings certainly set the higher end of the value range.

In a declining market, different story: Here, the closed comps set the higher end of the market value range, while the lowest priced listings indicate a price you can't go above, but those listings might have to sell for even less.

Listings, in any market are a challenge, in that you can't always properly estimate what they will sell for. Sometimes, the auction-style listings of today, where they price it a little low, then let everyone bid up the price, may be the clearest indicator of the exact value as of 1pm today.

Heavy subject. I've been a real estate / mortgage broker for 37 years, own a bunch of houses and have watched the value / comps / property price issue forever and I'm still humbled and have more questions than answers about this very tricky part of the market.

Great thread you started - hope we hear more from others.

Joffrey