I’m a big fan of compliance and have educated clients and many viewers on this forum about lending practices deemed to be fraudulent.
I’d never send someone in the wrong direction so I can can clearly say in this case that you would be doing nothing wrong.
If you put up your own 25% at purchase anything that happens after that is not controlled by the first mortgage lender.
Of course they wouldnt want your cltv to be higher than what their guidelines allowed at closing; but no where in your note/deed or elswhere does it say that you cant go out and get a 2nd mortgage. How much of a 2nd mortgage and from whom is not controlled.
What you are missing is that in the situation I outlined, the 2nd loan does not take place after the purchase. It closes after the first, but the quid pro quo was in place before the first mortgage. If the primary lender requires a statement declaring no other financing exists, I cannot sign that if the arrangement is in place. If I act on a pre-existing arrangement to circumvent the CLTV requirements, I can be charged with mortgage fraud.
As for having my attorney call you… sorry. I’m not going to pay her to do that. You can talk to your own lawyer. But its really simple: You can’t say that no other financing exists, then turn around and impliment a transaction that was arranged before the 1st closing. Its basic contract law really. And even more fundamentally, its basic ethics. To do so would be known as “lying”, which is generally not considered a virtuous quality (unless your last name is Clinton :bobble )
You can drop the wise remarks. They’re not needed for a forum where everyone is here to help.
I take my hat off to you that you’re wantng to structure this the right way and along the way try to educate a mortgage professional who’s been in the industry for over 10 years and specializes in investment loans.
Your’e trying to take out a 2nd mortgage at closing simultaneously with the 1st. I only missed this because you forgot to bring that up.. You previously noted that the 2nd would happen “immediately” after closing. Maybe should have reflected “at” closing.
Regardless of why this wasnt clear, the fact is that your title company has documents from the lender which ask if additional financing exists. As you’ve correctly stated this has to be disclosed and more than likely if you dont have a mortgage consultant who worked this out with the lender you’d fail. Not disclosing is where the fraud would be. I truly believe that if properly explained that you could get an ok from the lender holding the first.
Why cant the 2nd close the day after the first? My whole point previously was that under this structure no notice to the lender should be required (maybe other than letting them know that a second is in the works but not closing the same time).
This may be a long shot…do you have a primary property that he could record the lien against?
You are wasting your time with this “newbie” he is obviously just looking to stir up the pot for some reason. He has been offered very valid advice on how to make this transaction work and he just wants to argue. Mr. Goose you obviously do not have the finances to make this transaction work and the brains to follow the valid and legal advice that has been given to you. So just move along and keep calling all of the retail locations in your area to try and prove all of the professionals on this board who have given you advice wrong. Good lord it is so frustrating when fence sitters just look for reasons to not jump in and play the game and then try to blame there non-action on other people.
My questions are genuine and sincere. My skepticism about so called experts on this site is also genuine and sincere.
Lets face some facts: Carlton Sheets and others like him on this site love to sell very expensive wares. However, the advice they give can become obsolete very quickly . In some cases (such as a quid pro quo for 2nd financing before the first is complete) ‘expert’ advice can cause innocent bystanders to potentially run afoul of the law and/or have their mortgage called unexpectedly. There is no recourse against said experts. They can hide behind the protection of disclaimers in published works which state that they don’t provide legal advice. A good law would be one which requires each real estate investing work to be boldly stamped “Caveat Lector”
Where is the ethical responsibilities of these experts who charge hundreds of dollars for bad information? Do they provide ongoing updates? Not on your life… at least not without even more obscene costs.
Now, I will tell our mortgage experts here that I have solved my particular dilema using my own limited experience and having the ideas checked with legal counsel. I am going to closing with 75% conventional financing, and legally have an arrangement to refinance with no seasoning required to get much of my cash back out. All of this is with not only conventional lending, but with E-Loan of all places! ( Egad! No origination points and other nosebleed lending fees from so-called mortgage experts! :shocked )
Don’t fool yourselves by thinking the advice given on this forum is altruistic. There are such forums, but this isn’t one of them. Everyone has a motive for what they do… including me. The mortgage experts motive is to gain clients. The Carlton Sheets wannabes’ motivation is to sell books, software, etc. Neither of these is bad. Selling stuff is what makes the economy go round. The problem is that the so-called experts want to portray themselves as altruistic heroes who grace us with their presence. However, the reality is that the information is designed to take people only so far before they have to unload their pockets to buy the experts books or services.
A true professional contributes to the common body of knowledge without fees. How many legitimate physicians do you see hocking solutions to coronary artery disease for just $2,999 (plus shipping and handling) to other physicians? Zippo. They fully disclose discoveries and updates in best practices in peer review journals.
If someone is going to hold themselves out as being an expert, they best be prepared to be challenged, and meet the challenge like a gentleman. Unfortunately the standard, predictable response among real estate investing ‘professionals’ is to result to ad hominem slurs and impugn the motives of the challenger instead of contributing to public knowledge. :bobble
I am not quite sure you want advice, but others do read these notes, so this is for them:
Who knows? Maybe the days of free money are over. The lenders were foolish for several years, we all took advantage , and everybody had a good time and (hopefully) made a lot of money.
I would try a small local bank that holds their loans in-house.
If you can’t get anyone to finance it in exactly the way you want to do it, and the deal is a good one, my advice is to do it anyway.
If the property is worth owning, then more money down will make it cash flow better and make it even better to own.
If it isn’t worth owning unless you can get it for free, it probably isn’t really worth owning and you should keep on shopping until you find one that is worth owning.
One thing I would certainly do, if the banks won’t do a loan with the seller carrying the down payment, that means that anyone who is going to buy is going to have to have the cash for a down payment. That greatly shrinks the pool of buyers who can purchase.
If you are the only one who can qualify to purchase, then you can probably get it for a lot less than the asking price.
If I am not mistaken what you are doing is exactly what Ben and I suggested you do in the first place. Close on your first lien and then go get a second lien cash-out. It only took you umpteen number of phone calls and postings before you decided to do it. So for all your arguing and daring to be proven wrong guess what?? You were wrong.
As for your ridiculous rant… there are plenty of professionals on this board who give advice without any hope of any financial gain. Perhaps you have not taken the time to read through the beginners forum or the landlording forum, but there are plenty of posters all over this board that post advice just because they like to help people. Perhaps you are one of the people who got scammed by an expert in the past and now just like to go around pointing fingers at people to help you get over the internal anger that you have because you feel like you got taken advantage of. I think the professional advice you need to seek out is that of a psychologist because tramping around the internet ranting at people that are just trying to help you cannot be healthy. The funniest thing is that even after you lashed out at all the corporate greed you still ended up taking our advice. Since all of us here are only out for ourselves and to generate business I will be forwarding you a bill for the time I have wasted trying to educate you. LOL.
Also, good luck with E-loan. I’m sure you will get a fantastic rate and low fees because they probably get all of their advertising for free and all the people that work for them donate their time just because they like to help people such as yourself. They have no costs to recoup so they can take care of super intelligent people like yourself.
who the hell does a buy and hold to rent and finances 100% anyway? not a real investor. you’d be feeding the alligator for the next 20 years - (for the newbs, that is having a negative monthly cash flow where you pay out more money from your own pocket after receiving the rents). Then he whines and attacks everyone in the forum trying to help. A real investor would structure this with the down payment for the simple fact that it would cash flow and put a return in his pocket. The way he wants to do it means he’s paying interest on his own money! This is way up there on the list of “Dumbest Financial Moves in American History.”
I think that wildgoose had an agenda before he ever started posting. After awhile it just got old reading his postings. I would love to hear whether he ever even closed on this property. He did not have enough money for reserves to get approved.