Transactional Funding

Hi gang, :help

Has anyone completed a deal using transactional funding?

Lot of these funding Companies on the internet. And a few on this website.

Would like to know the deal went? And the Company you used? Any feedback?
Steamnsteve in Las Vegas Nevada

Yes I did. If you want to know then you are most welcome. But there’s a lot sites cover this topic. If you seek help you can find it elsewhere too.

NICK

Hey would like to hear about how your deal work with this type of funding

Who you used for it or would say is good to use

As there are a lot of people here who have never used it and would like to know how it went form a person who has

And i was wondering something as well this

Has any one heard or know of a funder that will do the transactional funding for 30 days and not just a back to back kind of thing ?

Thanks for your input. To my understanding transactional funding is good only for back to back closing. Anything past one day funding is considered a loan.
I have already talked to a few transactional funding companies I found on the internet. They said MAKE SURE your end buyer has the ability to fund and close the purchase on the same day. Other wise they may pull the transactional funding out of escrow.

So your would loose your deal and most likely your security deposit from the escrow account for non performance on your purchase contract from the origional seller. At least that’s the way it works in the great real estate waste land of Las Vegas NEVADA.

I would also like to hear more details from Nick or someone else that has actually used transactional funding to complete a deal.

I’ve heard of many people that mention transactional funding as an option, but I haven’t read of anyone that has actually used it.

JUST keep in mind a lot of people do not want to talk about there deals for what ever reason

So if we do not get a response to the question it is not because it has not been done just that the one who has done it is not wanttting to talk about it

Over the last year or two i have seen a trend to this alot of deal makers not wantting to talk about there deals

I think when asked the more wiser real estate deal makers should speak up and help the not so wise

I talked with a Real Estate Broker in Las Vegas about Transactional funding and double closing. This broker has over 25 years of Real Estate experience in the Las Vegas market. She said is is legal to do a double closing in Nevada. However she also said many brokers will not let there agent be a agent in a Real Estate Transaction using Transactional funding. She said the risk of being SUED by a Seller or Buyer was great due to the potentional of NON DISCLOSURE by one of the parties of the transation. She has instructes her agents to first close the purchase by the Buyer. Then write a new purchase agreement with the Second Buyer. The date of the purchase agreement must be after the closing date of the orginal purchase agreement.

Any feed back on this subject is welcomed.

HEY was wondering if any one knows fo a company that will do this type of funding

This would be for commercial deals ?

Or just any company that will do temp funding for up to max 30 days for commercial deals

I am a real estate broker and transactional funding lender in Denver. I always err toward the side of disclosure when arranging back to back closings, using the following language in my contracts in the additional provisions section:
“Buyer is a professional investor and intends to resell the property for a profit.” (a-b contract)
“Contract specific performance is contingent upon seller obtaining clear title in a separate transaction of the Property on or before closing of escrow.”

These disclosures are significantly more important and should be expanded to separate documents when dealing with a short sale on the buy side. Many lenders now are requiring seasoning periods, which negates the use of transactional funding. I keep a log of regulatory changes

altered due to rules violation

I agree with Paul, disclosures are very important. I am a transactional lender too. Not sure why people might not want to discuss these deals. They are pretty straightforward and simple.

For the person getting advice from the Realtor, forget them. They know little about this. It is all about finding the right Title company who knows the transactional process. They handle everything.

The investor just needs to get final approval on the A-B transaction and get a solid B-C contract in place for the same day (back to back closings…not simultaneous). The trans lender will work with the Title Agent on the funds. Fees range from 1.5-2 points.

Transactional Deals longer than 1 day are much different and much riskier. Not many lenders do them any more. I do the locally in Chicago only.

The biggest issue to being able to use transactional funding is the flipping rules by FHA, not sure if Fannie / Freddie are following FHA’s lead on this yet, I havent looked, but if you want to know, I will look it up if you want.

FHA will not fund a loan where the seller in the transaction is not on title, period, that includes assigments. The only way that they will is if the seller is on their list of excluded investor entities. A private investor / person, will not ever be on the list.

What that means is the only way a private person can flip is to be on title 90 days or more. Here is another kicker, in the lending world these days, it doesnt really matter what FHA, Fannie, Freddie, and VA underwriting guidelines are, the individual lenders underwriting overlays are always way tougher and they are the ones with the gold, so they make the rules. Dont get me wrong, it can still be done, but the end buyer may not be able to use financing via the traditional channels, or the seller may have to sit on title til the 91st day before signing a purchase agreement.

Gotta love these new rules. I have figured a way aroound it, but it took some very creative brain juice to get there.

This is not a factor. FHA suspended the 90 day rule 6 months ago.

Transactional funding is easy to do, I have done many. There are many C lenders who will do it.

I’m not looking to disagree with you, but when they lifted the flipping rule, it was purely for those entities on their excluded list. A private person is not exempt from their flipping rules, period. If you havent read the policy, well here you go. This is from the FHA handbooks, in the last 3 minutes!!!
http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-2.4.7
e. Restriction on Re- Sales Occurring 90 Days or Less After Acquisition
If a property is re-sold 90 days or fewer following the date of acquisition by the seller, the property is not eligible for a mortgage insured by FHA.

FHA defines the

•seller’s date of acquisition as the date of settlement on the seller’s purchase of that property, and
•re-sale date as the date of execution of the sales contract by a buyer intending to finance the property with an FHA-insured loan.

Reference: For exceptions to this 90-day restriction, see HUD 4155.2 4.7.h

Here is the excluded list of entities that dont have to be on title for 90 days and the end buyer can still use an FHA loan. If your a lender, I assume you have access to what I’m copying and pasting here through the handbooks?

http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-2.4.7.h

h. Exceptions to the 90 Day Restriction
The only exceptions to the 90 day resale restriction described in HUD 4155.2 4.7.e are for

•properties acquired by an employer or relocation agency in connection with the relocation of an employee
•re-sales by HUD under its Real Estate Owned (REO) program
•sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies
•sales of properties by nonprofits approved to purchase HUD owned single family properties at a discount with resale restrictions
•sales of properties that are acquired by the seller by inheritance
•sales of properties by state and federally-chartered financial institutions and government sponsored enterprises
•sales of properties by local and state government agencies, and
•sales of properties within Presidentially Declared Disaster Areas.

Any subsequent re-sales of the properties described above must meet the 90 day threshold in order for the mortgage to be eligible as security for FHA insurance.

Note: HOCs do not have the authority to waive the 90-day resale restriction because it is a regulatory requirement and not an administrative policy.
Check me on it if you dont agree!!!

You can quote whatever esoteric code you want. The bottom line is the 90 day flip restriction is not a real impediment to doing any deal with transactional funding.

It has not been an issue in ANY transactional deal I have done, so your warnings about it are unnecessary. That is all I am saying.

Eric

You can quote whatever esoteric code you want. The bottom line is the 90 day flip restriction is not a real impediment to doing any deal with transactional funding.

So, it’s OK to violate/circumvent the law since you don’t understand it? or that you feel that they are not designed for you?

Well Eric, my warnings about it may be nothing to you and your business, however they are a real fact of life for alot of end buyers and those that do some sort of flipping to those end buyers.

To say the code that I quote is esoteric just shows what a fool and arrogant person you are. This information is directly from HUD and was intended to show some of the real life issues that some may run into considering this is in fact FHA’s rules. For you to think the whole world revolves around you again shows how small a person that you are.

I quote fact and these facts do affect the flippers out there if their buyers are using an FHA loan or other loan that follows these guidelines. Eric must have the tiger by the tail, cause his world is much different than the rest. Excuse me for pointing out something obvious that needs pointing out.

To my knowledge, the financing transaction is only good for back to back end. Throughout the day individual approved funding is considered a loan. I have talked to a financing of small businesses I found on the Internet. They said the buyer at the end of their ability to finance the purchases and close the same day,otherwise the receiver can get the financing operation.

I wouldn’t exactly call the FHA Handbook an “esoteric code” when dealing with an FHA property.

Keith

Ok, maybe using the phrase “esoteric code” seemed flippant. Of course I follow all the rules.

Without reading all the way back, I recall that the original post, was about whether back to back closings transactional funding was feasible.

One of the responses was that you have to be very concerned with the FHA 90 day rule.

My point was simply that the difficult part of this rule had been suspended, so the fear or concern about this rule is unfounded. The parts that remain in force can easily be dealt with in almost any circumstance by almost any investor. So it is not an obstacle to doing a deal.

In my opinion, that poster seemed to be discouraging the use of back to back closings as some sort of a difficult process. I was simply trying to give the opinion that they are not really a difficult process in the real world.

If you read every paragraph and clause of these rules a new investor can easily be overwhelmed and get the impression that things are much tougher than they are. I was trying to be encouraging to the OP.

BTW, I still think that law is esoteric. “Esoteric” simply means understood by few…it doesn’t at all indicate that it isn’t important law or that somehow I think it doesn’t need to be followed. I follow it in every transaction. But it really isn’t relevant to most of my back to back deals.

Eric