All Forum Posts by: Nate Marshall

There’s been a LOT of “hostility” on BP toward subject to transactions. Some posters have gone so far as to call these transactions scams, questioning the legality, morality, and ethics of the buyer. While imo this is unfair, extreme and just plain incorrect; the detractors do rightly point out that (1) the seller remains liable for a mortgage note secured by a property they no longer own and (2) as long as the note remains outstanding the seller’s credit capacity will be impacted negatively, often resulting in the inability to obtain a mortgage for a home purchase. They further point out that many sellers are unaware of the consequences of selling subject to.

I think it’s important to note that subject to became popular in 1980 - 1982 when it was virtually impossible to transact real estate using conventional financing. Mortgage rates reached 18%, so transaction were all either owner finance, wrap, cash or subject to.

The possible negatives of subject to have been thoroughly discussed. The positives are from the buyers prospective

1- the ability to buy a property with little down payment

2- the ability to obtain financing at below market rate

3 -not needing to qualify for convention/institutional financing

4- not having another debt on your PFS

5 - not needing to pay points and other fees to obtain a new mortgage

The positives for the seller are

1- can possibly sell a property in which they have negative equity without bringing cash to the closing table

2 -expand the pool of potential buyers

3 -possibly obtain a higher price/ quicker sale

4 - can utilize a wrap to potentially earn the “differential” on interest rate

5 -May be able to save the Realtors commission

All this being established, here’s the BIG question: Can a subject to transaction be done where both parties are reasonably protected? Let us know what you think!

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These are very important points for each side of a creative finance transaction.

A lot of SubTo transactions don't take these considerations into account when filling out their future loan applications. Omitting this information may be mortgage fraud. When buying a property SubTo, one is taking over responsibility for payment, thus incurring the debt. The court sees things that way.
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I would modify #4 "4- not having another debt on your PFS" . Actually, on the loan application 1003's that I've seen,
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Uniform Residential Loan Application 1003

Section 3: Financial Information — Real Estate. This section asks you to list all properties you currently own and what you owe on them.

and includes a full page of boxes to fill in such as

Property Value
Status: Sold, Pending Sale, or Retained
Intended Occupancy: Investment, Primary Residence, Second Home, Other
Monthly Insurance, Taxes,
Association Dues, etc. if not included in Monthly Mortgage Payment
For 2-4 Unit Primary or Investment Property
Monthly Rental Income

Creditor Name Account Number
Monthly Mortgage
Payment Unpaid Balance To be paid off at or before closing
Type: FHA, VA, Conventional, USDA-RD, Other
Credit Limit (if applicable)

It doesn't specifically ask who's name the loan is in. If you are taking the tax write off, you are acknowledging you are paying the debt. If you aren't making the payment, you don't get the tax write off and are subject to fraud for equity skimming.

Here’s where you make a slight error.

“Section 3: Financial Information — Real Estate. This section asks you to listall properties you currently own and what you owe on them”

What YOU owe on them. Unless you’ve signed some additional liability vis a vis the seller, YOU as the buyer of a property SUBJECT TO a mortgage on the property do not personally OWE anything.

“When buying a property SubTo, one is taking over responsibility for payment, thus incurring the debt. The court sees things that way.”

No, when buying a property Subject to, the buyer is specifically NOT personally taking over responsibility for the debt. That would be ASSUMING the debt. This is merely purchasing a property that is encumbered. And, no, the courts do NOT see it that way. Case law is well established differentiation between a loan assumption, and a subject to purchase.

Fraud can be charged if the purchaser has not fully disclosed intent and circumstance to the seller, as well as the other way around. However, we need to be clear that with a subject to transaction the debt is secured by the property; most often personal liability via a guarantee rests and remains with the seller/original borrower, the property buyer has no responsibility for the debt and no personal liability UNLESS he modified this status by contract agreement with the seller; in which case he may be liable to the seller only.

No problem. It's a distinction without a difference, according to the federal court judge I litigated under.

Would you also say the seller has no right to sue the buyer if the payments aren't made? Would you also say equity skimming can't occur because buyer never accepted responsibility for the loan? Would you also say the original contract has no enforceable power on the buyer without the signature of the buyer?

I don't want to put words in your mouth, so I will just say those were issues as part of federal litigation. You have likely heard of Fidelity National Title Group, who sent 4 attorneys to litigate, because it was a Subject To case that would change Title liability.

As always, facts are case specific.

Do you have a cite for that case? I'd like to take a look at it.

@Peter Walther: You've handled a lot of these, Do you concur or do you have a different experience than "If the Warranty deed is not recorded then the title has not transferred and the original seller still owns it."

Seems the property Morby bought out of foreclosure is in Lake Havasu AZ & falls under

https://www.azleg.gov/ars/33/00412.htm
B. Unrecorded instruments, as between the parties and their heirs, and as to all subsequent purchasers with notice thereof, or without valuable consideration, shall be valid and binding.

I get that but if you used that logic all these lenders that have their borrowers sign a quit claim at closing to be held in case they default/ or DIL and instruct title to hold it.. same thing they made a loan and now 2 minutes later they have the property back because this deed was signed.. Make for complicated transactions thats for sure.. NO equity no bueno.. long term rentals NO good either.

In MN if you try to get a rental license and your nowhere to be found on record of ownership and there is a different owner on record, there gonna catch n flag that requiring the "actual" property owner has to complete all licensing requirements.

And then there is the next level of doing a lease with a tenant. A lease is a conveyance of property use rights. Rights only an owner can convey, not your neighbor, not your Sunday bowling league buddy, only the property owner.

So then say you go doing all this work around efforts. Get a rental license, get it rented. Tenant moves out and ya hit em with say $2k assessed damages at move out.

Tenant says "F-u man, you don't even own the property, I looked it up, your renting somebody else's house". You threaten em with whatever, collections or small claims court, whatever.

So next tenant goes to a FREE tenants rights/advocacy group, who is all too happy to jump all over it. Next they report you to the Atty Gen. office claiming your doing fraud.

And it's a whole mess now. Court hearings galore, just a mess. Good luck wading through that feces storm.

See, this whole SubTo thing in residential is always just this daisy-chain of work arounds for this, work arounds for that, hide this, hide that...... Vs you could have just done a C4D and gotten the exact same deal results, had it recorded, avoided all the BS.

In residential, can anyone give me a good reason where SubTo is BETTER than a C4D? Something it does that a C4D can't? Serious question.

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In residential, can anyone give me a good reason where SubTo is BETTER than a C4D? Something it does that a C4D can't? Serious question.

Subto highly benefits the buyer. A guru can sell the concept of "no money needed", "no risk", "big returns" easily and make a LOT of money. ;-)

Keep in mind, there are legitimate investors, who have lots of experience and plenty of money that do SubTo legally and ethically.

That's not a reason, nor any detail, you only give an opinion that SubTo benefits the buyer, and no anything of it vs C4D.

Then talk about how SubTo is good for the Guru slingling how-to courses.

Aaaaaa ok, what the hell does a Guru's ability to sell more courses have to do with the actual viability of the transaction themselves?

You say "no money down" for SubTo. That's been pretty well fleshed out as the idiots path, persons with diddly squat for $ buying SubTo.

But more over, you can 100% buy on C4D with $1.00 down.

Both have cost of processing the transaction paperwork so that's a wash.

Next, to call SubTo "no risk" is the pinnacle of ridiculous BS statements. Seriously, you couldn't have meant that. That's like saying stop lights are GREEN, red light means go, it's just total blatant BS.

As for making "big returns", that is deal dependent. A person can make "big returns" in any/every strategy in existence, as well as making "big losses" and everywhere in between.

Yet again, NOBODY can point out 1 single logical or legit reasoning of anything SubTo does positively that can't be done via C4D........

So I ask, why do SubTo then? EVER. If we have C4D readily available that achieves all the same things, BUT without all the negatives SubTo brings with it.

WHY?.......

I am begging someone please give me just 1 logical legit reasoning, not opinion but a actual factual reasoning. I am coming at this with scientific method trying to find this answer and I can't. It seems nobody can either.

C4D does everything positive a SubTo can and without all the negatives; PROVE ME WRONG.

James,
The way you describe contract for deed in your closing sounds very attractive. I have bought one property on a contract for deed years ago and got the seller to agree to change it for a deed and mortgage/deed of trust. One of my concerns is how and what would be the remedy if the buyer finished paying and something happened to the seller before the seller could sign off on the deed. I’m in Texas so I would not be able to use a C4D here, but if I ever ventured out into other areas it would be good to know.

"James, The way you describe contract for deed in your closing sounds very attractive."

Is this where I am supposed to be announcing I am launching a "CD Success Legion" ? lol

"Yes, and now YOU-TOO for the low-LOW 1 time payment of just $47,000 can learn all the tips, tricks and techniques to make $1 Bazillion dollars, PER YEAR, with NO-money, NO-credit, NO-intelligence, NO-effort and in just 25 minutes per week from the comfort of your Mom's basement!"

Lol....

I see these pop up on Facebook daily. Everyone has the best thing since sliced bread. Well I'm sliced bread and they don't! LOL

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Quote from @James Wise:

Quote from @James Hamling:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @Don Konipol:

Quote from @Nate Marshall:

Quote from @Ken M.:

Quote from @T. Alan Ceshker:

That is a fantastic question.

For more than 20 years and over 15,000 closings we had 3 wraps called due. We fixed all three easily.

Then for the past approximate 3 years and numerous hundred closings, we have seen about 10 to 12 due on sale issues. There are a few reasons for this: getting insurance in place improperly; inappropriate contact with the bank; one loan servicer that is looking for wraps; etc. So, yes - there has been an increase in the percentage of wraps called due. Still a very small percentage -- but an increase.

On each of the approximate dozen that have occurred, only 1 loan was paid off and that was voluntary since the balance was very low. We have fixed all the rest.

I agree the due on sale clause is a risk in wraps.It is just a very small risk that can be fixed if needed. And, all real estate transactions have risk. Some more than others. It is our job to manage the risk at the inception of the project.

Thanks for the info and comments.

Alan

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Good info.

I don't mean for you to talk out of class, but Pace Morby says in one of his recent videos that he is doing "table top" closings (closing outside of escrow) "because he knows what he is doing".

Since he, as the "leader of the pack" has announced that information, which of course influences large numbers of others to follow suit, people who don't want to spend the money for a proper close;

well . . . let me change my thought here, from asking a question to making a comment. The recklessness that trend represents and its implications are staggering.

No response necessary ;-)

This is a larger problem than people think. Many of the people paying

$8,800 to 12,000.00 to Pace are not even real estate investors. I have seen Pace pop up on You Tube seemingly like he wants inexperienced people. Too many people are being hurt and it is just a matter of time before a State AG or the DOJ gets involved. The "Morby Method" people have no business making a "big chunk" off of OPD (Other People's Deals)!

I wonder how many deals Morty’s mentees actually close?

Don I think they close quite a few as Pace has a few things he teaches one is gater funding which is providing EM deposits for wholesalers and flippers. Of course what could go wrong with that .. He also talks a lot about gap funding or seconds so those we know will blow up occasionally. He has made millions personally Just like any other national guru who hit it just right has the Utah based fulfillment companies coordinating his marketing. I suspect if I was guess he has made North of 50 mil personally and it could be closer to 100 mil over the last 5 or so years he has been doing this.. All the negative press he gets on Bp just water off of a very wealthy ducks back I am sure he could give a rip about what anyone says about him here on BP. Guru done with right timing and right product like Sub to when rates rose is a total money maker for sure..

Ain't no way....Even Clayton Morris who had a much larger following than Pace grossed a fraction of that. Morris got paid $6,000 by Whalen for every house he sold. He sold about 500 so that's a gross of $3 million......No way Pace is pulling in $6,000 from his students who need $500 EMD loans.

ya I beg to differ Jim.. I worked with Armando Montelongo and Nick Vertucci and rich dad poor dad .. these guys made MILLIONS and I am very confident that Pace has made that kind of money Keep in mind he is not selling houses he is just selling information and subscriptions to his club.. Not defending him or his message .. But I know what kind of money is made in that business being a back end vendor and personal friends with Nick and others in the industry I have also been to 2 of the different fulfillment companies in Utah These guys make so much money I know you probably dont beleive it.. But one of them had about 150 callers on their floor of their office and the other had about 600 employees.. Plus a 30 million dollar jet you dont buy those on CC and BS.

its a fact those buying into Paces club for the 8 to 10k 90% will do nothing but Pace has retained the payments..

Also Rich Dad made bank I was a vendor for a few years at their monthly seminars were 100 or so investors paid 40k each to be there and that was monthly.. Now granted the cost to get the butts in the seats for the in person events was about 50% of revenue.. by the time you advertise do the first freebie event then then the 3 day work shop..

At Armondos and Nicks events which were 8 to 10 times a year they would have 500 folks which accounted to about 200 paying clients each at 40k.. do the math.. And then at the event they upsold them other educations and once they sold everything they could sell.. The students would come to the back of the room to buy rentals and thats were I was at.. I would provide financing of the BRRR for their rentals.. SO we would make 25 to 40 sales in one day 8 to 10 times a month.. It was pretty wild.. Met a lot of interesting folks over the years.

Not sure if Pace does big events like this but he certainly sells his info and his timing was perfect for SUB to rates rose and it was a perfect pitch for him at the time.
Just like when I started in RE in 75 by 79 to 90 when rates sky rockets sub to or owner finance or wraps of our properties were 80% or more of the transactions.. One year we did 800 transactions this was buying our inventory and then selling so 400 properties.. we were in the land business this was all land.. And a ton of fun in the day.

I'm sure the guy is making money, but pulling in the kind of numbers Armando was pulling in back in the early 2,000's, no way no how. Armando was a legit mainstream household name with his show. Guy was like Property Brother's big. Today the media landscape is too saturated with all that stuff. It's been done by everyone and their brother and his following is way too small to be able to sell that many $8,000 courses to people who need a loan for an EMD.

This https://thestrive.co/pace-morby-net-worth/ jumps into trying to sort out his actual income and net worth but even then, it's a big question mark.

Given his history prior to all this, namely the ugly stuff in his history, I don't think there will ever be full clarity of it all because I am certain he is laser focused on obfuscating it as much as possible.

And if in his shoes, yup, I'd do the exact same.

Keep in mind James that if you made a "How-To-Sec8" success program, sold it for just $2,500..... You'd only have to sell 40k of those to hit $100million in gross sales.

There is more then 1.3million sec8 rental units is US. That's selling a package to just 3% of units out there.

Make it $5k and add a "monthly payment plan" now were talking only 20k sales to hit $100milliion.....

Fruit for thought.

Yea but he ain't selling 40,000 $2,500 courses man. He's got like 300,000 YouTube subs. When you're selling paid info you're lucky to get 1/10th of a % of what people are gonna consume for free.

And to be clear, I don't have any issue with people selling info. I just think the info he sells sucks and do not think he's made anywhere near $50M or $100M selling it.

He likely only made a fraction of that.

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Quote from @James Wise:

Quote from @James Hamling:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @Don Konipol:

Quote from @Nate Marshall:

Quote from @Ken M.:

Quote from @T. Alan Ceshker:

That is a fantastic question.

For more than 20 years and over 15,000 closings we had 3 wraps called due. We fixed all three easily.

On each of the approximate dozen that have occurred, only 1 loan was paid off and that was voluntary since the balance was very low. We have fixed all the rest.

Thanks for the info and comments.

Alan

This is a larger problem than people think. Many of the people paying

I wonder how many deals Morty’s mentees actually close?

Lol, they are doing "payment plans" for people...... Monthly payments.

I'll randomly get crap offers on my properties from idiots in his programs or whatever it is he's calling it. There are people who can't put two sentence together and he just let's um use a screen shot of one of his bank accounts. It's pretty weird. See below.

I have probably had a dozen or so people since the new year hit me up who have had problems with his people. Very few are educated. Maybe not even that intelligent. A lot of basement dwellers.

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Quote from @Ken M.:

Quote from @T. Alan Ceshker:

That is a fantastic question.

For more than 20 years and over 15,000 closings we had 3 wraps called due. We fixed all three easily.

On each of the approximate dozen that have occurred, only 1 loan was paid off and that was voluntary since the balance was very low. We have fixed all the rest.

Thanks for the info and comments.

Alan

This is a larger problem than people think. Many of the people paying

3 Votes

Quote from @Cloey Green:

Quote from @Ken M.:

Quote from @Cloey Green:

Ok, thank you!

What state are you in? You just go to a search and put in
"Nebraska Attorney General Complaint" for instance if you are in Nebraska. They are free and they want to know when there are problems that affect the people of the state. Some TV stations handle that kind of thing too. They have someone assigned to "Consumer Complaints."

I am in Utah. I plan on doing it sometime this week. I work late at my job, so I sleep for most of the day and I just need to file the complaint, because my experience will benefit other people when they are deciding on it they should have the truth and it really needs to be spoken of that this mentorship isn't really a mentorship. Everybody pays $10k only for everyone in the FB group to answer each others' questions and most of them are newbies themselves.

Yep. I have a number of people who paid $8,800 to 15,000 send me the paperwork and many actual contracts. Forwarding them to a retired FBI agent who worked on the money trail for 9/11.

1 Vote

Quote from @Jay Hinrichs:

Quote from @Brikkelle Thompson:

Hi, I attended Jerome’s Build Wealth Summit 2 weeks ago in Vegas. He had a lot of speakers over the 2 days, most mentionable are Pace Morby, Ed Mylett, and Tai Lopez (seems to be mixed reviews in Tai). TBH these circles do speaking engagements as promotional opportunities, it’s a hand shake and “I’ll speak at yours if you speak at mine”. They all spoke about something that you can already view in their You Tube channel.
Jerome has 2 programs, Buy Build Flip for $7,500 and Build Wealth Mastermind for $20K.
Jerome is still maturing from running a construction company to being a mentor and business leader that runs programs to develop others for success. It’s disorganized, lacks any agendas, materials, or content. The zoom meetings are a free for all and Jerome relies on his hype communication style to amp people up but there is no content or context to get amped up about. Participants are continuously told “we’ll cover all these details so you can do this too in just a moment”, the moment never arrives.
I’m planning to cancel my membership and get refunded. Super disappointing.

Tai lopez it appears has really costs Norada Capital immeasurable harm.

The fact that anyone does business with Tai Lopez amazes me. He is the poster child for Gitmo!

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Quote from @Cloey Green:

I have to agree. I was 20 when I thought I wanted to join and did join. I didn't even have $1000 saved at that time and I was really just thinking of going the regular route of going through the banks and just save up as much as I could for a down payment on my first investment home to rent out. I got the call from Pace's team and they made it really enticing to join, even for $10,000. So I put $1600 on a credit card for a down payment and then pay $500 a month until the full amount was paid off. I have yet to do my first deal, I know it takes hard work, but they made it seem easier and better than going the normal route and than what it actually takes to get your first deal or at least started. I didn't like the fact of calling up sellers just to offer sub to or seller financing. Not that those aren't great options just in case, but I just simply wanted to buy the house and rent it out on my own without jumping through hoops to get one while I am barely just starting and getting experience. A lot of the top people that help Pace, also are kind of rude when I asked questions in the group. I simply asked what questions to ask sellers and one of them commented for me to simply go look in the zoom vault and never offered which ones even. I also though people would be more helpful and such, but that is not really the case for me and have decided to go back to my original plan of just simply going through the banks and getting experience before I cold call again and door knock. I just feel like they market it in a way where it is the easiest thing in the world of real estate and the best thing and it is worth the price, but it really isn't.

There is an active movement now to get this to the DOJ and state AG's.

1 Vote

Quote from @Lyvonne Parker:

So it turns out you're a racist troll. I don't know why these people allow Something Like You on their platform

Cry harder!

0 Votes

San Diego, California

Quote from @Anthony Stephens:

It sounds interesting but my concern is that this would be an unsecured loan to someone who may not be in a good financial position. I assume that if the wholesale deal falls through the earnest money is lost and the "Gator" lender would have to seek the money from the wholesaler who did not have the funding to begin with.

Am I misunderstanding?

Gator bois are then left to resort to mafia collection methods. They seem to just stop at being physically violent.

0 Votes

Quote from @Chris Barrett:

You have no security in that type of loan however, if the deal falls through and the loanee loses the EMD you have to go to them to get money from them that they probably don't have.

100% fact! Over the past year I have had about a dozen people send me the gator paperwork. In fact I have all of Pace's bulls*it! I have forwarded it to the Colorado AG and Judicial Committee in the legislature.

1 Vote

All Forum Posts by: Nate Marshall

Nate Marshall has started 45 posts and replied 1155 times.

Post: Can a “Subject to” Transaction be done SAFELY?

Post: Can a “Subject to” Transaction be done SAFELY?

Post: Can a “Subject to” Transaction be done SAFELY?

Post: Can a “Subject to” Transaction be done SAFELY?

Post: Is Pace Morby a Scam?

Post: Jerome Maldonado real estate developer training

Post: Is Pace Morby a Scam?

Post: Had anyone heard of Cogo Capital?

Post: Pace Morby Gator Method Course Review

Post: Pace Morby Gator Method Course Review