All Forum Posts by: Corey Dutton

Thanks Jeff. I couldn't agree more with you on that.

Jeff you wrote: "ome states, such as Nevada, are extremely restrictive and do not recognize a difference between consumer and business purpose loans. They pretty much require a license for all loan activity that's secured by real estate. Others are quite lenient, such as Colorado."

Bottom line, you have to check what your State says about it. Don't rely on any old real estate attorney to give you advice. The reason I say that is because there's an attorney in Utah that's teaching people that it's ok to lend their own money without a mortgage license. In Utah where this attorney practices, if you're lending you're own money on residential real estate, regardless of business purpose or owner occupied, you have to have a mortgage license to do so. This particular attorney is selling "courses" to teach people how to lend their own money in Utah and he's telling them it's ok as long as it's not owner occupied. That's why I told readers to NOT rely just on an attorney alone, but to do their own investigation into it as well. Hope that's more clear.

Private money, non-bank lenders, also called hard money lenders have always lent money without the need of a mortgage licensing. But the financial reform following the real estate meltdown, namely the Dodd Frank Act, has subjected most financial services companies to regulation. For non-bank lenders who are lending their own funds, whether as individuals or as an organized company or fund, it now depends on the property “type” whether or not mortgage licensing is required. If one is lending one’s own money, or a fund’s money, on residential property with one to four units, one may need to be licensed depending on the State the property is located.

Many hard money lenders are confused and believe it is not the property type that dictates licensing, but rather the occupancy status, e.g. owner occupied versus non-owner occupied. This is the most common mistake that hard money lenders are making, and this mistake could cost them up to a $10,000 fine per transaction if caught making loans without a license on residential property. Make sure you’re in the know if you’re lending your own funds or other people’s funds! Don’t consult an attorney, but rather start by calling the Division of Real Estate or the Division or Mortgage Lending at your State level. Whichever institution at your State level that governs mortgage lending and/or real estate. Give that State regulatory official that you speak with, a very detailed description of the type of lending you are doing, how you’re doing it, etc. Bottom line, under the Dodd Frank Act, you must now have a mortgage license in most States in the U.S. to originate residential loans on properties one to four units, regardless of whether the properties are owner occupied or not.

As seen on Techcrunch.com, real estate apps like “SQFT” threaten the future of the seller’s agent in the real estate sale transaction. Or do they? I don’t think they do.

Having recently listed my own home in a very hot market, I was certain my home would sell quickly. I tried using an app, very similar to this “SQFT” app shown on Techcrunch, to list my home and save the seller’s agent commission. The phone started to ring, and showings began. But that was the first problem. Total chaos in my life due to calls, weeding out potential buyers, while also giving random showings of my home over the course of about a week. I was able to get no work done, so I essentially lost an entire week of work dealing with selling my home. Although these apps cut out the seller’s agent, the first problem with this is: how will you manage this process while still trying to work and raise a family? You won’t. This is the first benefit of hiring an agent to sell your home over using one of these apps like ‘SQFT.’ The agent manages the process for you, screening potential buyers, setting up scheduled showings, etc.

Another benefit of hiring an agent is the “sort of” important part about writing up the contract and managing the addendums that follow in the negotiations process. Huh? Addendums? How many people are actually qualified to manage the contract, not to mention the intense negotiations that can sometimes follow once a property is under contract? Only a licensed real estate agent is qualified to represent a seller on often, the largest transaction of one’s life. I can personally attest to the fact that I wouldn’t have been able to complete the sale of my home as quickly as I did, and with as little hassle as I did, without hiring an agent. I did hire an agent after all of the mess with the app, and my house was under contract within a matter of days and sold in a little over thirty days.

Before you jump ship on hiring a realtor and use one of those apps like ‘SQFT to sell your home, consider all of the complex factors involved in a real estate transaction. Are you prepared to quit your day job and your life for the time it will take to sell a property? Without a real estate agent representing you, that’s what’s in store for you.

Techcrunch article: http://techcrunch.com/2015/06/22/sqft-is-a-real-estate-app-to-help-homeowners-slash-broker-commissions/ )

If you’re looking for a hard money loan or bridge loan, you can visit one of the many ‘lending-related’ groups many social networking sites such as this one. You’ll certainly find a lot of mess to sort through, in fact, bogus loan scams are having a big party on social sites and you’re the guest of honor. There are so many fake lenders posing as legitimate lenders on such websites, that it’s hard to figure out who is real. So how do you spot bogus lenders on social sites?

1.Look for loan terms that seem too good to be true.

2.Look for individuals located overseas that are lending in the U.S. They will have an office in a high profile location overseas such as London or Singapore.

3.Look for emails with incorrect English grammar. If you speak to them over the phone it’s typically a broken English accent.

4.Look for individuals offering loans who do not have proper websites or domain backed email addresses. For example an individual with a yahoo, hotmail, or other email address is a red flag.

5.Do a google search for the individual or the company name together with loan scam or fraud and see if anything pops up.

This is a short list of how to spot individuals on social sites who are posing as legitimate private money or hard money lenders. Beware, they will waste your time and take your money in the form of upfront fees. Note some of the red flags listed above in your next interaction with a potential hard money lender on a social site.

Not to mention the challenge banks face with cyber security. This on its own is a huge ongoing challenge since banks must offer online & mobile applications to keep up with fin tech. It's a double-edge sword of course....

Banks, both small and large, are facing two extremely difficult challenges that threaten their continued existence in the financial services industry. Blindsided by the financial technology sector that has produced successes like PayPal, big banks are struggling to keep up the pace. The second biggest challenge that banks are facing is in the compliance with new regulations under Dodd Frank. For example, many banks can no longer be competitive in the U.S. mortgage lending market, for example, due to the higher costs of doing business under new regs. Even the big banks are bowing out of the mortgage lending space due to the higher costs of doing business. With these two challenges to face, it will be interesting to see what the banking landscape will look like in just five years from now.

The arena of private money lending, also called “Shadow Banking” in Europe, is not subject to the same regulatory requirements as are the depository institutions. For this reason, private money, non-bank sources of financing are taking increasingly more market share, particularly in U.S. mortgages. In fact, private money lenders took 53% of the U.S. mortgages last year, according to the Financial Times. Banks simply cannot handle the increased costs associated with complying with new regulations and are bowing out of offering mortgage products altogether, or are merging with other banks to take advantage of economies of scale.

Posted by Corey Dutton, Private Money Lender

Many real estate investors were extremely busy during the recession acquiring rental property portfolios between the years of 2009 to 2013. Because a lot of the distressed real estate acquired by real estate investors during this timeframe was purchased with all cash, it sucked a lot of cash out of their pockets. Not to mention all of the funds that were used up to rehab these distressed properties and get them rented again.

Real estate investors are now seeking rental property loans to recover some of their cash invested in these rental property portfolios acquired during 2009 to 2013. One common conundrum in this type of financing is that properties in a portfolio may be located in different States. Many banks are unable to finance these types of portfolios, so real estate investors are seeking out other loan alternatives such as private money loans to cash out of their rental property portfolios.

Because the requirements of private money lenders are far less stringent than those of bank lenders, they are much easier to obtain by real estate investors. This means real estate investors are able to put cash back in their pockets that was used to purchase and rehab the distressed properties they've added to their portfolios in recent years.

Trust deed investing, also known as lending on trust deeds, has grown in leaps in bounds since 2009. With banks in turmoil in 2009, it prompted a surge in private money lending from 2009 to 2015. So why such interest in trust deed investing, particularly by retirees? What retirees in particular like about investing in trust deeds is that they can receive a monthly interest payment, when other investments don’t pay monthly. Trust deed investors have also enjoyed appreciation of the real estate assets used as collateral for these loans, with prices on the rise since 2009.

What other assets/investments can you think of that provide a monthly interest payment and the return of your principal in 12 to 24 months? It certainly is a hard investment to beat if one has a basic understanding of real estate. What other investment opportunities would you add to this discussion that act similar to investing in trust deeds on real estate?

Posted by Corey Dutton, Private Money Lender

From the “Banking Weekly,” a Financial Times podcast from June 2nd, non-bank lenders in the U.S., also called private money lenders, are starting to dominate the U.S. mortgage market. For the first time in history, private money lenders have taken the majority of U.S. mortgage market, 53%, double from 2 years ago!

The big banks are slowly retreating from the U.S. mortgage scene because regulations have increased their cost of doing business substantially in recent years. Non-bank lenders, also called “shadow banks,” don’t have deposits like the big banks, so they regulated very differently than the banks. They are also smaller, more nimble institutions as compared with the banks which are anything but. It’s no surprise that the big banks are slowly retreating from the U.S. mortgage market. With all of the new regulations under Dodd Frank that they’ve been forced to comply with, their cost of doing the business of residential mortgages has skyrocketed. The small banks also cannot keep up with the new costs associated with doing mortgages. This is another reason we’ve seen such a wave of M & As in the banking industry in the past several years.

(Source: http://podcast.ft.com/p/2764)