All Forum Posts by: Robert Carpenter

So a defaulted note holder could foreclose, take the property back as an REO and the outcome of probate would become moot at that point ?

If a property is already in probate and then goes into foreclosure,  does probate have to be resolved before foreclosure can proceed ? 

  @William "W.J" Mencarow Very enlightening and stimulating post. Do you   expect to see sub series llc's used to take title to notes as well as property, and to see sub series llc's used as   joint venture vehicles for note investing and real estate investing ?

From what I have read online it would seem that the SEC was formed largely in the wake of the 1929 stock market crash for the purpose of safeguarding the public against fraudulent stock issuances, stock market manipulations, and the like. Securities regulations appears to have grown more out of concern to protect the investing public from nefarious investment schemes rather than to supervise business to business securities transactions. As well there is the whole question of whether promissory notes are securities or not, a question the Supreme Court took up in the case of Reves vs Ernst and Young. Briefly paraphrasing from online sites such as Centaurusps and casebriefs, a business entity known as the Farmers Co-Op sold notes to raise money to grow produce. The company went bust. An investor in those notes named Reves sued the coops accountant, Ernst and Young, alleging Ernst and Young had violated both state securities laws and the Securities Exchange Act of 1934 in its reporting and handling of the coops finances. Reves won the case on both his federal and state claims but Ernst and Young appealed pointing out that the 1934 Securities Act did not categorize promissory notes as securities. The court of appeals agreed with Ernst and Young. The Supreme Court sent the case back to a lower court which reaffirmed the original ruling. In a split decision the Rehnquist Supreme Court upheld the original ruling that notes are securities notwithstanding certain so called ‘judicially crafted exceptions.’ Perhaps foremost among judicially crafted exceptions are notes issued to facilitate sales of cars and homes. From the perspective of a note broker then, the bottom line would seem to be that insofar as the Supreme Court is concerned, residential mortgage notes are NOT securities, and it would therefore seem to follow that if residential mortgage notes are not securities then they are not subject to state or federal securities laws, and are therefore not subject to state or federal securities regulations. Now if residential mortgage notes are not subject to state or federal securities regulations, residential promissory note brokering would seem to fall outside the purview of state or federal securities regulations as well. None of this is to suggest that residential promissory note brokering may not fall under the purview of some other regulatory agencies nor that I haven’t badly misunderstood the Reves case and its implications. I’m merely trying to give an historical account of what I believe to have been the historical aspects of the Reves case but not at all a legal account nor any legal advice. In fact I would welcome any corrections and clarifications from those better versed in these matters(@Bill Gulley  @Dion DePaoli).

The impression I get from real estate license study material is that Banks will only put together loans they can turn around and sell to Fannie Mae.  How is it then the banks ever come to have non performing loans on their books ? 

A  rather systematized way (as far as I understand it and without meaning to offer any legal or financial advice on the matter) to accomplish the intent of the lease with ROFR, the CFD, the LC, the IC, the wraparound mortgage and so on, by different means,  is with the EHTrust transfer system.  Basically you put the property in a title holding beneficiary directed Illinois type land trust in which the trustee holds both equitable and legal title.   You make your intended lessee a co-beneficiary in the trust. Then you instruct the trustee to lease the property to  this resident co-beneficiary on a triple-net basis with right of first refusal at the trust's termination.  In this way the resident co-beneficiary (lessee) can take the interest income and property tax write-off for the property provided he agrees to take on all the property's upkeep and maintenance.  As well you can negotiate for the resident co-beneficiary to finance  a contingency fund to be drawn on to pay the mortgage in the event he misses a lease payment.  

Thanks Kevin

Those are very illuminating stats. I'm wondering whether the implication is that  creative real estate investing doesn't work in New Jersey, or whether there are precious few creative real estate investors :)

Hi Michael

I'm a direct mail marketing newbie.  Just wondering about the term 'count' in your equation.  Do you happen to have a worked example you could link to ? 

Thanks

Robert

Does anyone happen to know the  percentages   on traditional vs  'creative' real estate sales and  traditional ( bank ) vs creative  ( options, lease options, seller financing ) real estate financing?   I'm curious about   the percentage breakdowns on these four components of sales and financing:

What percent of home sales are made by real estate agents and financed by banks ?

What percent of home sales are made by real estate agents and financed creatively ?

What percent of home sales are made by owners and financed by banks ?

What percent of home sales are made by owners and financed creatively ?

Karen I've not had an opportunity to organize and build a development of this sort myself.  However if a market savvy developer believed such a scheme had merit I would be eager and happy to collaborate :)

Jon I just cked the link.  Seems to be back up and working.