Category Archives: Subject To Investing

MAPS or AMPS – The Questions You Need To Ask


My issue with MAPS or  AMPS, (whatever the flavor of the day they call it)  is essentially anything you say to the lender that’s not true is fraud,  and it’s even fraud by omission, if you intentionally omit a material fact. 

These clowns who sell mortgage assignment courses go way over the top. You are now seeing copy cat courses pop up.

I expect to see criminal convictions of these information marketers based on how they teach investors how to omit material facts to the bank !

HUD and the FBI are now aware of MAPS/AMPS and the fact that they are  teaching their students to commit fraud.

HERE IS THE TRUTHOnly the lender can approve an assignment of the mortgage. (includes payments) The CYA letter MAPS  uses is going to put you up the creek.  I cant wait to see their CYA challenged in court.  It used to subvert responsibility and conspires with the Seller to conceal.

 Stupid “Gurus..”  

It’s a sad day  when you  speak your mind to provide  a counter point argument and protect the pubic that one is sued!   I am 100% right from a legal stand point!

Ask yourself , Why is Phil trying to hide?   What a childish behavoir! You would think MAPS / AMPS  would stand on its own if it was legit.  His association with JT FOXX  should say enough once you get to his “bootcamp” !

 

Why I Am So Outspoken About Subject To/Mortgage Assignments


I used to invest using Subject to/ Mortgage Assignment methods but not anymore.

I am speaking from my personal experience that these types of transactions come back to bite you. Subject to/Mortgage Assignment transactions are ticking time bombs. In my early days of investing I believed the gurus who said, “banks will never call the loan due as long as you make the payments” or they said “Don’t worry, there is no due on sale jail” They told me all sorts of things to sell their courses. Little did I know how little they know.. until I got stuck.

I have had two banks call the loans due (accelerating the loans for payoff in 30 days) This happened because I simply had asked the lender to send me the new payment book to my new address. I begged and pleaded with them, but there was nothing they would do or I could do. I said, “I have been paying on time for 18 months and you have to honor that…..” The bank could have cared less. They said they “had a fiduciary duty to their investors when the mortgage fell out of compliance“.

On numerous occasions I had major issues getting a new home owners insurance policy after the initial one was up for renewal. ( the sellers were gone ) Sure I ended up getting another one, but the financial cost was utterly ridiculous.

Sellers and Buyers Will Turn On You!

Just when you think that your new buyers are happy in to their house ……… Surely nothing can go wrong or can it ??? Have you heard the saying, LIFE HAPPENS! These “unqualified buyers” that you put into the house now come back to YOU when they get divorced, lose their job, or any other reason and they want out. They stop making the payments and who do you think is responsible now?

The seller comes back to you and claims he was in distress at the time and he would have signed anything and he did not really understand what you were doing. (CYA letter has little meaning) He is accusing you of predatory behavior! End result….. I end up making payments until I can sell it off at no profit another year later! Ouch. If you don’t take up the slack, you can be sure that you will be facing some major trouble. You cannot walk away from this and win.

I look back on what I did and I have now realized that the entire process of doing subject to/ mortgage assignment deals is unethical. Come on folks, if you have to conceal what you are doing from banks or the insurance company ( and you tell people that you are not liable if it goes bad) … don’t you think that should raise a red flag for you?

If you have ANY ethics at all, the concealment of information is at least immoral, at worst its illegal. I actually do know investors who went to jail for mail fraud for doing subject to/mortgage assignments. Sure you probably can slip underneath the radar if you do one or two of these deals, but once you start scaling your business larger and start doing more of these types of deals.. you will get caught somehow!

I don’t care what “new” paperwork these gurus come out with that promises you no risk. I have examined in great detail the “latest courses” being touted as the “miracle” cure to help families in distress. RUBBISH. ALL B/S !! There is nothing new in those courses at all!! I have seen better paperwork by much smarter people that have landed them in jail. WHY?? Because people in distress want money , they will SUE you. They will turn you in for taking advantage of them. Banks file lawsuits to recover losses and YOU will lose!

Here is a summary of how ..

  • Mail / Wire Fraud: by obtaining money or property by means of false or fraudulent pretenses .i.e…sending or receives anything (collecting / sending payment via in the mail or internet)
  • False statement (conventional loan) influencing in any way…federal…loan…or any change or extension… deferment of action
  • Concealment : in any matter within the jurisdiction of any department or agency of the United States… knowingly conceals or covers up by any trick, scheme, or device a material fact
  • Conspiracy : two or more persons conspire to defraud the United States or any agency thereof.

You are NOT going to see a statute in the law books that says “subject to” investing is illegal. BUT ..simply use your brain and say to yourself… if this method of investing is legal and legitimate……. Why do you have to HIDE IT??

Lets move on the the IRS!

I also got called out by the IRS during  an audit. I was told by a guru that I could have the tax credit since I was making payments on a subject to financing deal that I was holding in my own portfolio for a rental property. WRONG! I was denied and ended up paying !

These so called gurus are not interested in finding out what the law really is. They are simply regurgitating what others gurus have said years before. Folks, times have changed. The cheese has moved! We are not in the same economy. More legislation is in place to protect the unsophisticated buyer and seller. So, I ask… “Why don’t the gurus get a RULING”? Show me that this is legal !! They can’t!

The big issue I have is that is that these Gurus keep saying that “due-on-sale clauses are not going to be enforced”. If they are almost never enforced, why not tell the lender what you are doing at the outset?  What does that say to you ??? I have learned that if you cannot disclose what you are doing to everyone in the transaction, (banks, lenders, insurance,etc) the deal is probably unethical and/or  illegal.

THINK REALLY LONG AND HARD IF THIS METHOD OF INVESTING IS WORTH IT TO MAKE A FEW BUCKS?

I THINK NOT!


http://duncanwierman.com/go/files/4.swf

More Authorities Weigh In On Subject To/Mortgage Assignments Investing Methods


The more people I speak to and the more research I do into this subject, the responses are:

In North Carolina

LOAN ASSUMPTION AND BROKER LIABILITY

Blackwell M. Brogden, Jr. , Deputy Legal Counsel

The Commission has discovered an alarming number of incidents of real estate brokers and salesmen counseling, procuring or assisting sellers and purchasers in arranging a transfer of property in violation of these due on sale clauses. Licensees should be aware that to conceal material facts from the lender or to assist others in such actions will not only subject them to disciplinary action by the Commission but also civil liability.

Simply put, Realtors / Agents who take part in hiding  the transfer of the property from the bank and the insurance company is deceptive!

The latest advice from the “gurus”  is the put the onus on the buyer to inform the bank.  They are instructing this un-loanable buyer to make a MEMO on his next mortgage payment check to try and set a precedent that if the bank accepts the check as payment, that the bank as in fact agreed to  the sale and it is consider verified ….. that is FALSE and Ludicrous!!!

Also know that when people send checks in to the bank to make a payment,  the checks are actually being sent to a clearing house. These are automated MACHINES who process these checks. Their argument is MUTE!

The National Association Of Realtors

The NAR  code of conduct states  in Article 2 :

REALTORS shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.

Simply put .. Realtors who take part in these transactions  are in indeed hiding the transaction. They are certainly not being forthright by asking the  bank to sign off ! Clearly this is  a violation of Article 2 !!


John T Reed of www.johntreed.com

I love this site!!!   This guy has got to be one of the best real estate investing minds in the country!  He speaks his mind without fear and with passion. (I like that)

I BELIEVE HIS JOHN T REED SHOWS DEFINITIVE PROOF THAT THESE TYPE OF TRANSACTIONS ARE  DANGEROUS TO ANYONE WHO GETS INVOLVED IN DOING THEM!     THE LEGAL REPERCUSSIONS ARE SEVERE AND VERY REAL!

John T. Reed discusses how  State statutes and common law are broken:

Mortgage SCAM =  ” if the borrower promised to inform the lender if the ownership, occupancy, etc. changed, and fails to do so, they have committed breach of contract. Persuading someone to commit breach of contract could be illegal interference on your part”.

Here is another example how this is CRIMINAL ….. “getting the previous owner to keep the insurance on the property in his name to conceal the change in ownership from the lender is arguably conspiracy (two or more persons), mail fraud (something related to the insurance will go through the mail either from you or to you), concealment of a material fact, and false statement (to the insurance company about who is the current owner). If you do two such deals within a ten-year period, you have arguably violated the racketeering law.”

Please read John T Reed’s ENTIRE article on Subject To Mortgage Assignments http://www.johntreed.com/dueonsale.html

Concealment is illegal or immoral

FBI and SC Realtors View On Mortgage Assignment and Subject 2


It is actually easy to show anyone doing “sub 2/mortgage assignment” that this method of “so-called” investing  is considered FRAUDULENT!   Look on the FBI website!

I have also provided the  SC Realtors Association response.. they point directly to the FBI telephone number!

Links and images below:

http://www.fbi.gov/stats-services/publications/mortgage-fraud-2009

Mortgage Assignments / Subject 2 – Being Called A Crime in Economy


Banks are crying foul about Mortgage Assignments /Subject To Financing!

The more banks, Realtors, and other industry professionals I speak to about “Mortgage Assignments or Subject to Fincancing”, the more common phase I hear is ” Foreclosure Rescue SCAM. The reason they are saying this is because these types of transactions are PREDATORY in nature. The distressed homeowner is being presented a miracle solution with huge promises that cannot  possibly be kept.

Many info marketers and their brainwashed “flock” say  Mortgage Assignments / Subject to Financing  is legal. I have some news for you…. That its not true. These info marketers keep saying to me “show me where the statute is  that says Subject 2 investing is illegal”

Technically in many states you cannot show them a statute directly.  The fact remains that many attorneys are now coming forward saying the Mortgage Assignment / Subject to Financing investing strategy is VERY problematic. Some attorneys have said (off the record) that if you only do one or two of these types of transactions and  IF nothing goes wrong... you could probably stay under the radar.  The attorneys did however STRESS that if you do this technique it should only  be considered as a very short term strategy for three to four months. That is the only way they see that you won’t get caught!

The big issue everyone is worried about is:

What happens and who is responsible when the “new” buyer stops paying on the mortgage?

History has shown that 80% of sub-prime mortgages have gone sour. What makes the investor think the Mortgage Assignment Mortgage Assignment / Subject to Financing transaction wont go bad? If you have been in the real estate investing industry long enough,  you already know that 70% of Lease /Options transactions in comparison also go bad or never cashed out!

Who is responsible when a mortgage assignment Mortgage Assignment / Subject to Financing goes bad?

Answer: It is the person who put the transaction together!!! It does not matter one iota if you have a CYA (Cover Your Ass) letter at all! The fact that the seller was offered a PREDATORY solution and probably was in duress at the time, they would probably sign anything.

I know you have been told by these guru’s that a CYA letter and perhaps along with some other fluff documentation is all you need. However in a standard real estate transaction there is no such requirement. This then becomes not only a complex transaction but now enters into the realm of a “scheme”. Don’t believe me yet? Send the bank the CYA letter and ask them to send you a confirmation on the terms of the CYA letter! They will NOT do it!

Lets move on to when the transaction breaks down. Let’s imagine you end up going to court and you have both ” Mr. Now Unhappy Seller” and “Mr. Now In Default Buyer” (who paid you 10K to get in the underwater property) in the same room.

You show up in the courtroom and you say to your attorney… No problem.  I have my CYA letter with me, I have nothing to worry about..

Well the attorney is not going to let you present it !!! Knowledgeable real estate attorneys are saying that the actual CYA letter itself SHOWS INTENT to DEFRAUD! Not one attorney I spoke to would want this letter to appear into evidence as it is incriminating.

I would like to share with you part of a transcript in a court case where Subject 2 Fraud was on trial. Here is how it went (sic):

The Prosecutor asks on the witness stand:
Sir, am I correct in saying that you own the home, but you are not responsible for paying the mortgage?

You: Yes Sir, I have a “Cover your Asset” letter signed by the seller, stating that I do not have to pay or do I have any liability or responsibility to make payments

Prosecutor says to jury:
Do any of you own your home and don’t have to pay your mortgage payment? How about a car or credit card?

Everyone on the jury shakes heads their heads NO.

Prosecutor looks around to all of them and says: So how could this be? Do you see that this is a complicated scheme that is not standard in any real estate transaction?

At this point..
Case is pretty much won for the Prosecutor and rests.

Defendant gets convicted of Mail Fraud on multiple counts. Why? Every rent check RECEIVED is considered MAIL fraud since they came in the mail (even though they were deposited and paid to the bank) The defendant got 16 months in jail.

Here are two news stories you need to know about ..

The first one is regard to the a famous guru, “William Tingle” and who is the author of “Subject 2 Magic”

http://www.co.bibb.ga.us/magcourtcivil/CMCaseDisplay.aspx?C=10047947S00&Y=2010

Bibb County Court Records Synopsis:

If you look at the divorce papers filed by Melinda Tingle (ex spouse)  they are full of info.  It appears that there are  payments that had been  made on houses  that have been never applied to the debts, which is  of course  once again opens a legal nightmare.   His ex-wife  (Melinda) house is now in Foreclosure.

This proves that transactions can go bad even when  the guru investor does a deal. What makes one think a new investor can do better having no experience and no cash reserves ?

NEXT EXAMPLE: Augusta GA.

This story below broke was in the Augusta Chronicle and has since had follow-up stories.

http://chronicle.augusta.com/stories/081708/met_469804.shtml

Regina Preetorius, and her mother Marie Champagne, who had already been convicted of mail fraud in the past and recently tried to pull this same private lender Ponzi scam in Atlanta:

Regina Preetorius, was a “sub to/lease-option” investor ( who ended up losing over 40 house to foreclosure and about $3.7 mil of private lender money). She lived in a $567K house and was using the private lender money for her own payments instead of the houses. She was basically selling security deeds.

Sue Reimer ( the attorney ) , got implicated in the story. Reimer Law firm was checked out and was found to be clean but Regina’s stench really hurt their business. The Reimers are good people and good attorneys but they deal with scumbags like Regina Preetorius (who has since moved away to New Mexico and is a Realtor there) and Justin Anderson who, ironically, ripped off a good friend of Karen Hanover’s!!!!

This is actually quite funny since Karen called out Justin by name as she told the story of how he ripped off a friend named Alicia in a failed condo conversion project. Karen called out Justin’s name in front of about 800 people at the event she did with DC Fawcett in Dallas and told everyone how he destroyed Alicia’s retirement.

That’s it for today!  Next week I am going to bring you some audio interviews with people who went to jail for mail fraud in regards to both Subject 2  investing strategies.

Texas SAFE Act and Subject 2/Mortgage Assignments/ Effect On Investors


Why Investors doing Mortgage Assignments with Subject to Financing are breaking the law under the  SAFE act

As a standard disclaimer, the following is not legal advice.

The federal Secure and Fair Enforcement  (SAFE) for Mortgage Licensing Act of 2008 (SAFE Act) is the federal government’s  minimum threshold of rights and protections.

How does this impact you….

The act establishes minimum requirements for obtaining a mortgage loan originator license, the process for obtaining such a license, who must obtain a license, and penalties for originating loans without a license..

Under the act, a Residential Mortgage Loan Originator (RMLO) is any individual who takes a mortgage loan application, or offers or negotiates the terms of a residential mortgage loan. There are several exceptions to the definition of an RMLO, but the two most relevant are:

* People who perform only administrative or clerical tasks for a licensed RMLO.
* A real estate broker or agent, unless he is compensated by a lender, mortgage broker, or other RMLO, or their agent.

A residential loan is a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other security interest in a dwelling or residential real estate.

A dwelling has the same meaning as defined in the Truth in Lending Act, which is a residential structure or mobile home containing one to four family housing units, or individual units of condominiums or cooperatives. Residential real estate means real property on which a dwelling is – or is intended to be – constructed.

There are only a few classes of people exempt from having to be licensed when originating a residential mortgage loan. They are:

  • An individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual
  • A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney does both of the following two things: (a) The attorney takes a residential mortgage loan application, and (b) offers or negotiates the terms of a residential mortgage loan.
  • An exclusive agent of a registered financial services company who is individually enrolled as a registered mortgage loan originator with the Nationwide Mortgage Licensing System and Registry.
  • Someone who offers or negotiates terms of a residential mortgage of his own homestead property.

Becoming licensed as a RMLO requires classroom work and passing an exam. Some states also  conduct a background check. The penalties for originating a residential mortgage loan application without a license are severe:

* Order restitution.

* Impose an administrative fine up to $25,000.

* Issue cease-and-desist orders, as well as immediate temporary orders if necessary.

The impact of  owner-finance deals is significant. The definitions of residential loan, residential real estate, and RMLO are broad and extensive. We cannot imagine a scenario where the seller in an owner-finance deal would not discuss the terms of the loan with the buyer. Therefore, makes it practically impossible for investors who routinely enter into owner-finance transactions to do so without being licensed.

The net impact of SAFE is that almost all owner-finance sellers will have to use an RMLO to originate loans unless they fall into one of the extremely narrow exemptions. Unless any such seller is originating a loan for an immediate family member (defined as a spouse, child, sibling, parent, grandparent, or grandchild) or owner-financing the sale of their own homestead property, the seller will have to outsource the loan application to a registered RMLO.


Mortgage Assignment/Subject 2 Promoters THREATEN me with lawsuit


Today I got the telephone call from two prominent promoters of a certain mortgage assignment/subject to product warning me  that IF I posted their names on my blog (as I did with Karen Hanover) … I would be sued for hundreds of thousands of dollars in their state.

Why would that be if they knew what they were doing is legitimate? One other promoter even  tried to bribe me and say… “Come on they will promote you if you lay off them!!  RIGHT.. like they ever offered to promote me until I spoke up about this scheme.

This has made me even mad now and once again I am ready to take on a certain group of real estate info marketers who only are interested in taking your hard earned dollars!   I can assure you that they don’t care about you one bit. Once they get their money they will disappear, leaving you with the mess to clean up.

Get the full story about the truth about mortgage assignments and how he went to jail for it.

www.MortgageAssignmentTruth.com

Stay away from Mortgage Assignments/Subject to !

Stay tuned for more news from the National Association of Realtors, Mortgage Compliance and Servicing Industry, Top Banks and more

http://www.duncanwierman.com/blog/in-the-news/why-mortgage-assignments-are-bad-news-deceptive-and-illegal/