All Forum Posts by: Sean Cole

Still waiting on an answer to my question from a few hundred posts ago...

Do the non-wholesalers 100% of the time offer 100% of what they're willing to pay to a seller?

On a related note, at least here in Ohio, the marketing issue really comes down to publicly advertising.  My guess is that the same is true in FL.

Still waiting on an answer to this question that I post in each one of these threads:

For those that decry wholesalers "stealing equity" from sellers, do you 100% of the time offer the exact highest dollar amount that you're willing to pay for a house that you buy off-market?

Your last post, Dave, is exactly what she says you have to do. Your first post that you have a contract on 123 Main St was what I was taking about. You can’t do that in Ohio. Glad we agree! We wholesale between 50-80 houses a year here in Ohio and have had several conversations with the Division and we a good relationship with them. Much better to be that way than trying to hide in the shadows!

Doug Pretorius I think you misunderstood her comment about the contract and address. It’s during a discussion about not be able to advertise the address, but only that you have a contract. Her comment is that you can’t sell the contract without disclosing the address, but you can’t advertise the address. She’s basically saying that you can’t effectively advertise since you can’t advertise the address.

The youtube video that got shared is the most recent publicly facing statement from the Ohio Division.  Obviously, they aren't going to lay out the legal ways to do what they clearly don't want happening.  I've had several conversations with enforcement folks in Columbus and there are certainly ways to still wholesale legally in Ohio, but you certainly CAN NOT advertise publicly a house that you don't own.

Doesn't matter what we think the law says or doesn't say.  The Division will begin an enforcement action and will fine you and you will pay it.

@Marc Winter without much searching:  https://www.fdic.gov/regulations/resources/directo...

And from Wikipedia (go read the citations.  I'm only including this because it puts the sources in 1 easy to access spot):  The Financial Crisis Inquiry Commission formed by the US Congress in 2009 to investigate the causes of the 2008 financial crisis, concluded "the CRA was not a significant factor in subprime lending or the crisis".[124]Ben Bernanke, then Chairman of the Federal Reserve, wrote that experience and research contradict "the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties."[125] Government economists and officials, including Janet Yellen, then President and CEO of the Federal Reserve Bank of San Francisco,[126] FDIC Chair Sheila Bair,[127] Comptroller of the Currency John C. Dugan,[128] and Federal Reserve Governor Randall Kroszner,[129] also hold that the CRA did not significantly contribute to the subprime crisis. According to Yellen, former Chair of the Federal Reserve, independent mortgage companies made risky "higher-priced" loans at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the "higher-priced" loans that have contributed to the current crisis.[126][130][131] During a 2008 House Committee on Oversight and Government Reform hearing on the role of Fannie Mae and Freddie Mac in the financial crisis, including in relation to the Community Reinvestment Act, when asked if the CRA provided the "fuel" for increasing subprime loans, former Fannie Mae CEO Franklin Raines said it might have been a catalyst encouraging bad behavior, but it was difficult to know. Raines also cited information that only a small percentage of risky loans originated as a result of the CRA.[132]

Originally posted by @Marc Winter:

@Sean Cole, if you remember, the policy was written that if the lenders did not give loans to certain classes of applicants, then the government would step in and fine the lender. Or they could keep the lender from expanding their banking operations.  Or they would FORCE a lender to make a 'donation' to an organization like ACORN, to make up for the bank's lack of filling their 'quota'.  

If you don't care for the word 'forced' call it something else, but the way I see it,  the government pushed these loans by the policies they promulgated and selectively enforced.  Do we need government regulation?  Of course.  But not to the detriment of the taxpayers.  Those of us who were FORCED to bail out the banks when the whole scheme unraveled.  Bankers and legislators--totally in bed with each other--it's all fun and games until somebody gets hurt--that's you and me.

Yikes! I think there's a giant misunderstanding at play there... CRA (Community Reinvestment Act) is about a lot more than providing home loans to people. At it's core, it's about ensuring that banking services are provided to low income communities - specifically areas that banks "redlined" when no government intervention was involved. It's absurd to claim that banks were forced to give loans to people who couldn't repay them simply because those people were low to moderate income. Lending standards related to DTI and ability to repay still apply to those loans. I used to manage a bank branch in a CRA neighborhood for US Bank, and I assure you that our lending standards were identical there as they were in wealthier areas.

In short, banks were (and are) required to offer banking services, including loans and deposits, in low to moderate income areas, but no bank has ever been forced to make a loan to someone who they knew could not repay.  Claiming otherwise is outright dishonest.  The foreclosure crisis didn't happen in low to moderate income areas - it happened in medium to high income areas where everyone went and bought way more house than they could afford or bought 3 houses on negative am. loans.  

I hope that you just misunderstood what CRA is and didn't intentionally try to mislead people about what it is.

Originally posted by @Marc Winter:

The way I see it, not investors, not spendthrifts, not credit card or student loan debt, high rents--none of that will break the backs; it's government policy and interference.  Remember, the last real estate 'bust' 2007 on, was in fact, not a real estate bust, it was a financing crisis.  It was caused by political philosophy gone way bad;  EVERYONE  should own their own home.

Sorry, not everyone should own their own home, imho.  Responsible, working individuals that have enough income and savings to purchase and have a reasonable chance of actually repaying the loan--THOSE people should own, if they want.

The government FORCED banks/lenders to give out mortgages to people that actually had NO CHANCE of repaying.  You all remember--package up those doo-doo loans, call them grade A, and sell them as securities.  Banks and Wall Street  did the dirty work, but they were following their own philosophy--government mandates we make these garbage loans.  OK, we'll figure out a way to profit from it.  They did, at all our expense!

As the business cycle progresses, eventually you can expect another downturn or even a crash--that is the normal cycle of things.  Don't be afraid of it; embrace it.  Trust and follow your gut, only buy bargain, make-sense investments, keep some of your powder dry (don't overleverage), and take time to rest, recover and take a view from 30,000 feet to get a feel of what's the major, over-arching trend.

Simple, but not easy.

Good luck, keep investing.

 How did the government FORCE banks to give home loans to people who didn't qualify?

Government policy certainly encouraged homeownership by most/all, but it's actually lack of government oversight that allowed banks and financial institutions to create and sell CDOs made up of C-grade CMBS debt and call it an A tranche offering. Chasing the immediate paydays of the debt offerings is what led to more and more relaxed lending standards. That recession really was a great example of capitalism going bad and showed why some government regulation is necessary.

It's a 2-way street.  If you want to ensure that your agent will drop whatever they're doing to take care of you, sign the agreement.  If you're ok with them calling you back a day or more later because one of their clients who did sign an agreement called, then don't sign one.  When we're working with clients, we prioritize the ones who we know are going to lead to a payday.

@Paul C Mead, what are you looking for in Cincinnati?