How Would You Broker This Note?

Someone owns a house free and clear — no mortgage.

They sell their house for $200,000, receive a $40,000 down payment from the buyer and take back the $160,000 balance as a note, an IOU, from the buyer, where he promises to pay the $160,000 plus interest in installments.

The note is secured by the house, so if the buyer defaults the seller can foreclose and get it back. In other words, the seller is the bank.

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Colorado Discourages Seller Financing

The Colorado Real Estate Commission says Dodd Frank is too complex and creates liability for both the Realtor and seller. They have basically told Realtors not to get involved in any seller financed transaction. They say refer buyers and sellers to a LO or a lawyer instead. You can’t find a LO who wants to get involved with a seller financed transaction. Not all buyers and sellers can afford a $250 an hour attorney. Now property owners and buyers who want to use an installment sale are being denied access to a Realtor”

“Real estate brokers are prohibited by Colorado law from taking a residential
mortgage loan application or offering or negotiating the terms of a residential
mortgage loan, including a seller-financed loan. A real estate broker should not
even assist a seller or buyer in any way with the application process or related
documentation or engage in any loan term discussions if the seller-financed loan
involves residential property. This caution would include not giving a seller advice,
including as to whether or not the seller might be “exempt.”

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Proposed Tax Reform Includes Ending 1031 Exchange

The ninety two year old 1031 exchange statute is once again the target for abolishment in current tax reform proposals.


Cops to Inspect Homes Without Notice For Illegal Rentals

Authorities in Long Island have launched a crackdown on homeowners who rent their house out to tenants who have not been registered under a “zero tolerance” program that will see police conduct home inspections without notice.

Landlords in the Long Island community of Westbury will be targeted by a newly created police “Housing Enforcement Unit” that will “modify search warrant law to eliminate prior notice, aggressively use warrants and housing sweeps on a regular basis.”

Residents are being encouraged to report their neighbors to authorities if they suspect they are housing tenants who have not been registered with the government.


Home Sales Held Hostage by Junior Lien Holders

Tom Axon’s mortgage-collection firm gets about 25 calls a day from delinquent homeowners’ brokers seeking approval to sell their houses for a loss and avoid foreclosure. We’ll help, his staff tells them, as long as we get paid enough.

Axon, working with co-investors, buys distressed U.S. home- equity loans and other junior real estate liens, often for pennies on the dollar. Investors like Axon have to be dealt with whenever a home is sold in a short sale, a transaction in which the lenders agree to accept less than what’s owed on the property.

“The short-sale brokers know us — they know we’re not cupcakes,” Axon, 60, chairman of Jersey City, New Jersey-based mortgage-servicer Franklin Credit Management Corp., said in an interview. “At the end of the day, my friend, you signed a contract. You owe money and we’re willing to reach an accommodation that is commensurate with your ability to pay.”

Tough bargaining by second-lien holders is delaying deals and killing some short sales, even as banks embrace the practice to avoid costly foreclosures and help clear the market of homes that are worth less than the loans on them, said Vicki Been, a New York University law professor who has studied mortgages.

“It’s an opportunity for the second-lien holder to charge a price for their cooperation, because it’s needed for a short sale,” Been, a director at NYU’s Furman Center for Real Estate & Urban Policy, said in a telephone interview. “If they’re too greedy, it may squelch the whole deal.”