Lots of good content on this 'Mortgage Assignment Contract Overview' thread!
I will attempt to add my 2-cents, thoughts and overviews on this subject-to (LOL!)...
Most here agree that the "due on sale" clause can cause a mortgage to be "accelerated" if mortgage payments are assigned (i.e., "taking over another's' mortgage payments").
Most here agree that lenders are not mandated to accelerate a mortgage, but have the option to do so, if a "due on sale clause" has been violated.
Most here agree that lenders almost never "exercise their rights" to accelerate a loan (mortgage), because of a due on sale violation.
My spin is pretty simple, recently I read that Fannie Mae estimates a foreclosure cost a lender about $60,000 for each foreclosure. I also read that HBSC Bank stated that their foreclosures cost them about 20% to 25% of the loan value.
That being said, my opinion would be that a lender would need a compelling reason to accelerate a mortgage, based on a due on sale violation.
Most would agree that on the surface, a violation of the due on sale clause, if pursued by a lender would be a civil matter and not a criminal matter.
I wanted to ask myself, "...what types of action could be construed as combinatison of criminal/civil torts and not just civil wrong doings"?
Well first (from an investors point of view), if I'm planning on doing multiple deals using "mortgage wraps" and/or "mortgage assumption/payment" strategies that creates quantities of "promissory notes and mortgages" for others;
...for my sole purpose of making money from these strategies, can I be considered to be an "unlicensed loan originator"? Especially if I'm doing many deals, over a period of time? Which may be considered a criminal tort: "unlicensed loan activities".
Also, what is different in the past year or so, are various new Federal & State laws, put in place to protect "distressed homeowners" who may be in default with a mortgage, or are so motivated, may be vulnerable to criminals and scam-artists, who will take advantage of their "distressed situation" by ripping them off, via upfront fees and "fake efforts" to obtain a loan modification, and more!
And further: As investors, have we thought through, that our actions, in putting a deal together, may be viewed as some sort of "predatory act" praying on vulnerable, desperate homeowners, when we said to ourselves as we pocketed $10,000 via an 'assignment fee';
"...No way! I was just helping a motivated seller, and yes, I was also helping a motivated buyer. It wasn't just about the money!"
We as real estate investors, have been under this delusion for decades. Food for thought? Right?
Why do I say all this? Let's use Phil Grove, as an example, as he is the "guru De jour", for this thread.
Because of receiving "email blasts" from a whole bunch of 'real estate gurus' over the past months, first touting Phil Grove's MAPS and the past month or so, touting Phil Grove's AMPS.
I decided to log-on to a series of 5 videos, and see what all these gurus are hyping.
Let me get to what I didn't like out these 5 video presentations by Phil Grove out of the way first!
1. I do not like investors who in breath say just how their services help other (sellers and buyers) yet in another breath, basically brag how they NEVER (or seldom due, as Phil did mention he on occasion paid a seller up to $1000 in "move out money").
So let's analyze this: ...a seller spent months looking for & then buying a house, via applying for a loan & spending many thousands of dollars as a down payment, and maybe years making monthly payments, home repairs, maintenance, upgrades, taxes, accessments, insurance, and more!
And we come along, sometimes in a few days, put a "home under contract", back out of the deal, cross our names off, and assign it to a motivated buyer, and collect an assignment fee from the buyer, lets say for $12,000 (or 10% of $120,000).
No we do not give the seller "one red cent"! Seller packs his bags and leaves, with the understanding that we helped him "get out from under", while we pocket a $12,000 assignment fee.
How about this Phil? Or most any other investor doing these deals?
Here's a more ethical way: Why not take a $6,000 assignment fee and give the seller a $6,000 down payment for his years of effort and thousands of dollars already invested by the seller?
It just makes sense to me not to brag about helping a seller out of a difficult situation on one hand, and on the other hand, pocketing a large assignment fee, and giving no money to the seller.
2. Paying for Phil Grove' AMPS services.
At the end of video #5, came the pitch to pay around $997 for Phil Grove's AMPS, plus around $99 per month to continue the AMPS program.
Wow! What can I say? Maybe I can see some paying a thousand bucks for Phil's AMPS, but about $99 a month, thereafter?
His AMPS program was open to everyone, pitching "locking-in a territory or two", secured with your payment(s). Some could make a case for the $997 buy-in, and maybe $15-$20 a month for the first year, and if you excel, maybe a higher monthly fee after the first year?
Now here's what I do like about what I saw on the 5 AMPS Videos:
1. Phil addresses the fact that the investor may be considered "unlicensed loan originators" and offers a team of lawyers to do all the paperwork, create the assignment forms, notes, mortgages, etc., title insurance, closing documents, doc fees, stamps, filing fees, recording of documents, etc. As such, according to Phil (and I tend to agree!) the investor does not originate loans, as this is done by legal professionals, who are licensed/or allowed to originate loans by law.
2. Phil has also addressed all the new Federal & State disclosure laws, regarding distressed homeowners, MARS, and more!
3. Phil does disclose to the lender that loan payments are being assigned to another, but the mortgage will remain in force. Phil suggests that a monthly mortgage check be sent, to the lender, along with the disclosure of the "assumption of mortgage payments", and suggest to the lender if they have a problem with this please return the check. (I like that!)
4. Phil's program explains all types of other programs to the seller: foreclosure, short sale, deed-in-lieu of mortgage, rent-to-own, and of course, "taking over one's mortgage payments". With all the options available to the seller, and all the "pros & cons" of each, Phil's presentation, shows the seller that it is possible to get out of the property and get full price for the house with little or nothing out of pocket for the seller, by using the "take over payment strategies". (I like the idea in giving sellers choices!).
5. Servicing of the payments by Phil's legal team. AMPS arranged for a fee of $15 or so, per month, to service the loan payments (i.e., will receive the payments from the buyer and then forward the payments to the seller's lender.) Plus other services.
6. I like the idea that a large team of legal professionals are available to the investors in all 50 states. Which should make the investor, sellers & buyers feel more comfortable in doing a deal, vs. not having a large professional team in place, and leave the seller and the buyer, to deal with each other and the lender by themselves.
7. I further like the way Phil addresses all the ancillary things like homeowners insurance which is paramount in keeping the lender satisfied.
All in all, I "do feel the hype" of a massive Internet marketing program, called AMPS, that will sign-up a ton of new and experienced investors alike all over the country.
The question of the day is will Phil's strategies help you succeed?
That's the $997 & $99 per month question?
So here's my advice: If you are planning on doing these types of deals and do not have proper paperwork, experience, good contracts and agreements, etc, a legal team to help you that understands "owner financing", a loan servicing company, ongoing continuing education on the subject, a network of fellow investors, doing these same deals in your area, that want to partner with you!
Buy the program, don't do it on your own, if you do not have all the above in place!
Here's a tip: If you cannot afford to do something like this "on your own", why not find 9 others who would partner with you (in this AMPS case it would it would cost each partner just $99, plus less than $20 per month.). And if you see you like working with a particular program (like AMPS) and are successful, then buy your own deal if still avail.
Ok, I've said enough! LOL!
Good luck to all!
