I had to share this email with you. It's fun, but also it reflects just how the mind creates our world.
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On Mon, Dec 29, 2008 at 9:52 AM, Richard Moxxxxxxtz wrote:

WOW everything you offer requires CASH. THAT IS EXCELLENT FOR YOUR POCKET, NO WONDER YOU ARE A MILLIONAIRE.

______________________________________________________

Here was my answer...
I agree, I wish I didn't have to pay for food or gas or house payment or the IRS, either. No wonder those capitalistic pigs are rolling in money.

Hey, you and I can start a new movement where the Government pays for everything on our behalf and provides us with free housing and free bread lines, and all businesses must give us everything for free. All we have to do is show up for our State Sponsored jobs.

Victory to the People's Republic of USSA
Thanks for clearing my head on the evils of money, Comrade.
John Alexander

PS. By your answer, I'm guessing you are either a Socialist or just Broke. But only in one case (Socialist view) should you have responded that way. If you are broke, you can always find or make money that will allow you to get back in the Game. I was broke and begging for change in the last major recession in the 80's. I learned my lesson back then... namely don't get pushed out of the game due to a lack of money because no one is going to give you money for nothing. I started working at the car wash until I saved up enough to go back into business.

What excuse are you using to stay out of the game? What excuse are you giving people that keeps you broke? You even wanted to give me an excuse... that I'm wrong for asking for Money for my Products and Services. But that would mean that you would be wrong for taking money for products or services too. How are you suppose to work? For free? Your mind is running a bad program. Your mind is telling you that accepting money for something in exchange is BAD or Wrong.

Your mind is a powerful weapon which you can turn on yourself in times of stress. With proper mind programming, you can aim it back toward success. Download my free ebook in the free member's area called Millionaire Mind Programming and start back on the road to happiness and a fulfilled life. And don't buy anything I or anyone else has for sale until you can afford to take the risk.

Gold and Platinum members can now access and use our newest program. The Lease/Option kit can be marketed online to sellers everywhere. Right now sellers are finding that even "A" credit buyers are having a hard time getting approved and are willing to sell using a Lease Option strategy. This product allows you to capture this niche market need. As a member, you earn $30.00 on each $47.00 sale.

Make sure your domain names point to your new pages instead of the Temporary Seller Finance pages. We have placed that program on hold until the credit markets change. We just had no seller interest in using the old program and so we have replaced it with the Lease Option Kit program.

We plan on introducing more programs that our members can use to increase their existing HSA income. There is so many needs in this market and this company has and will continue to answer those needs while enriching our members that use these programs.

We had another record breaking week, that's three weeks in a row. HSA is proving to be more than anyone expected... except me, of course :-) . By addressing needs in the marketplace, there is plenty o f money to be earned for providing needed answers to problems people face.

If you haven't yet joined, you are missing the easy time. As we go into next month, people around the country and the world will be looking to start a business of their own. You want to be positioned already to capture that yearly phenomenon that happens every year at this time. But this year it is going to prove to be even greater than in past times due to the need of people losing jobs and losing faith in their future at their existing job.

HSA Changes and Updates

We have placed the Temporary Seller Financing Program on Hold until the RIETs lower their Down Payment Requirements and increases the LTV. We have seen a major drop in the use of this program by sellers. Therefore, it is no longer a viable service that we wish to support. However, those of you who wish to continue using it may do so directly with the Investor. Submit your deals as usual. But the sites have been changed due to our change of direction with the program. 

We must continue to use the sellersite to assist you in obtaining a merchant account from First Data since those pages have been approved by the merchant company. Therefore, we have placed a Lease/Option product on the sellersite page which you can sell if you wish. A training session is being recorded that will show you how to customize the page to allow order taking. It will be listed in the UPDATE section of the member's area when it is completed.

The market continues to tell us where to go to make money, right now the best and most popular way is using the 1% Funding Program and  The Asset Finder Program.

These are the sites you should be promoting in any internet marketing. The Lease Option Course Page will give us an indication of how many sellers will need this method to sell their home and we will continue to develop that and other products you can market online.

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New updates on the Asset Finder's Program

We have posted the latest updates under the Training Video in the Asset Program Area of the Platinum Member's site. I also reedited the training video to clean it up.

Business has grown 4 times since the introduction of the new Asset Finder's program. This means that if you are not promoting this new program, you are missing easy money.

85% of all members that join are coming in at Platinum Level.  Stats show that it takes 10 people to sign up in order to generate 1 sale. 1 in 10. That's without you doing anything, your numbers will go up if you actually phone your signups and let them know you are available to help.

The webcast with the Title Company went great and I have posted that in the Last Week's Training Call area for Gold and Platinum members to listen to.

We have added new 5-6 minute videos to the Biz Op websites to break down the different programs, comp plan etc. See the links on the new updated page at www.weprovidethecash.com

Here is a quick video on the Proof of Funds Letter and how easy it is to get one inside the members' area.  Proof of Funds

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I've been helping people become RICH now for many years. I found a great site that took me back in time to my early websites (I can't remember what the original site address were before paperbiz) this one started in 1998. About every 6 months, the website would take a major change in look and feel as new developments happened with HTML coding etc and this archive site documented it along the way. I loved learning how to program pages and at the same time it recorded the history of my company and what we did along the way... the lives we have touched and the people who I have come to know and respect along the way. To view our history online, click this link and visit my company over the years.

http://web.archive.org/web/*/http://www.paperbiz.com

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GDP Report shows a continued downtrend in the Market Place

The GDP report showed a -.3% decline in economic activity from last quarter's fictitious 2.8% reading.

Inflation-adjusted after-tax incomes fell 8.7%, the largest quarterly decline since the record-keeping began in 1947

Spending on nondurable goods fell 6.4%, the largest decline in 58 years.

Translation: Whatever income you have been depending on month to month... WILL REDUCE! Someway, somehow, and sometime shortly; if not already.

Action Required by You to keep  the "stuff" you own and like... Find an additional source of income while you still have it.

We are facing the worst economical future 5 year period since the Great Depression. And while I don't expect that it will get that bad, I do know many will feel that way IF THEY DON'T PREPARE NOW!

Start your own business and take back control over your own income and future. No one is safe from the layoffs and reduced incomes coming over the next 5 years. We still haven't seen the damage about to fall on hard working people who put too much faith in the Government and it's bad moves that put us in this mess.

 

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While 95% of WallStreet pro's are looking for and anticipating a final blow out to the downside tomorrow or sometime this week (the last week of Oct), my take is that beginning tomorrow we will see the US market head back up and with it, bringing an end to the "fear of a Crash" mentality. Although the bear market will continue, the current fear of a market crash should start to disappear after tomorrow.  We should see a big bounce up in the market on Tuesday.

The Housing market, doesn't really see its bottom until Dec or Jan of this year. But with the credit markets poised for a new stock of cash from your tax bill, and a bailout of the bad loans made by "licensed" institutions and individuals starting to be put into place, the housing market will eventually come back to life again.

Of course, those using my flip systems have been able to fly profitably right through this down market since we don't "Buy and Hold" real estate. We day-trade it. Taking ownership with $10.00 and a contract and flipping it in just a few weeks. You can't get hurt when you don't "risk" your money.

Find out more at my homepage.

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My 3 Point Summation of the effects of the New Bill HR 1424

1. Nothing really changes for the homeowner facing foreclosure. They continue to lose their homes at the current rate. My Inverse Purchase techniques continue be the most effective and only way to flip homes using no credit and no money.
   
2. Banks don't have to sell to the public anymore at pennies on the dollar.
   
1. Short sales prices adjust to the market rate of what the Government "run" banks will purchase them at. 
2. Current REO's are transferred to the Fed directly or indirectly through other lenders connected to the Fed Program.
3. Home prices will stabilize in the next 4 months, but the low home prices will continue for the next 2 years, minimum. Sellers will continue to have problems finding buyers over the next 5-7 years thus, giving us plenty of opportunity to earn larger than normal profits by using my creative strategies to flip homes.
   

Here's my interpretation of how the Bill will Play out. This is my interpretation and opinion of how the bill plays out, and NOT what the Bill describes in detail.

First, not all lending institutions will want to get in bed with the Government on this Bill and others will not be accepted by the Fed to participate in the bailout. But bad loans from these non participating institutions would be able to sell them to institutions that are Fed participants. The Fed will set the price they will pay for bad loans and/or bad pools of loans. Once this pricing is set, then non participating lenders/banks will know the value of their bad loans on a per loan basis. These loans could then be valued within a few points of what they could be sold to the participating bank. This means that lenders nationwide would no longer need to sell homes at pennies on the dollar nor short sale at deep discounts as they do now.  While this appears to stop short sales at the current deep discounts we see now, (assuming the government pays more that 60 - 70 cents on the dollar for bad loans), it will set up a new flip environment that will grow rapidly for those who have the keys understanding how to work under the new rules.

Since homes sold at deep discounts will start to disappear from neighborhoods, this will have a positive impact on the current downward home pricing trend. Home prices will stabilize at the current pricing for homes in any given area.  However, I don't see home prices rising anytime soon due to the current glut of homes on the market. It may take up to 2 years to reduce the numbers down enough to see growth in pricing again. 


The following is what the Bill actually details...

The Fed will buy and hold either the note and mortgage instrument itself or buy and hold derivatives backed by notes and mortgages. In either case, the Fed will keep the Loan Servicing Company (the company in charge of collections and foreclosures for lenders) in tact on the loans.  The Servicer will continue to attempt to collect and loss mitigate including completions of workouts and short sale transactions. The Fed will encourage the use of HOPE for Homeowners losing their homes to foreclosure. If the homeowner is unable to make payments under a workout program, then the Servicer will process the foreclosure. The Fed then ends up with the title to the home and will then pool these homes and sell them at the highest price available on the open market at some time in the future or when home prices rise enough for substantial profit to tax payers. (This will most likely be done on a sliding scale. They will sell some now at lower prices and as time goes by, raise the price depending on how much of the fund they use up. They can only use 250 billion at any one time).

The nonprofit government backed organization named "HOPE" will work between the homeowner and the Servicing Company so the Servicer can determine if the homeowner can make a modified loan arrangement, this includes the same factors that they currently use. Reduce the rate, reduce the principal etc. But most homeowners losing their homes can't make even that kind of reduced payment therefore, the numbers losing their homes to foreclosure will continue at about the same rate as if this plan was not enacted.

The Rescue Plan was created to help the Banks/Lenders, and NOT for people who can't make their house payment.  This fact means that we investors will continue to operate the same as we have been.


Below are the parts of the New Senate Rescue Bill that pertains to Real Estate Investors.

STANDARDS.—To the extent that the Secretary acquires
 mortgages, mortgage backed securities, and other assets
 secured by residential real estate, including multifamily
 housing, the Secretary shall implement a plan that seeks
 to maximize assistance for homeowners and use the
authority of the Secretary to encourage the servicers of the
underlying mortgages, considering net present value to the
taxpayer, to take advantage of the HOPE for Home
owners Program under section 257 of the National
Housing Act or other available programs to minimize
 foreclosures.

CONSENT TO REASONABLE LOAN MODIFICATION
REQUESTS.—Upon any request arising under existing
investment contracts, the Secretary shall consent, where
appropriate, and considering net present value to the
taxpayer, to reasonable requests for loss mitigation measures,
including term extensions, rate reductions, principal write
downs, increases in the proportion of loans within a trust
or other structure allowed to be modified, or removal of
other limitation on modifications.


ACTIONS WITH RESPECT TO SERVICERS.—In any
case in which a Federal property manager is not the owner
of a residential mortgage loan, but holds an interest in
obligations or pools of obligations secured by residential
mortgage loans, the Federal property manager shall—
(1) encourage implementation by the loan
     servicers of loan modifications developed under
     subsection (b); and
 (2) assist in facilitating any such modifications,
     to the extent possible.

Text of the Bill:  www.notebiz.com/bailouttext.pdf

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Sure, we know they will fix the problem at some point, and the same rich cats will still get exactly what they wanted and tax payers will get stuck holding the bag. But it should have been done yesterday instead of later this week. They should have prepared a Bill that would have gone through instead of playing politics.

There where many changes in the market yesterday that affected a ton of people that you won't hear about or even realized how it affected the masses... even you.
Here's  how it affected me and hundreds of thousands of people with LIBOR based loans...

After the failure of the Bill, London's LIBOR rate went up by a full 1%. So how does that affect America?
Many (most) of the ARM loans in this country are tied to the LIBOR rate. And when these ARM loans reset next month and each month thereafter, they add a "Margin" amount to the existing LIBOR rate. Which means that if you have a loan tied to the LIBOR rate, next month or on the next increase, you will see an increase in your payment. Here is an example:

"A" credit homeowner
$200,000 loan balance
5% current interest rate (ARM)
1,073.64  monthly payment

With the Bailout signed
3% margin to the LIBOR 3%
New payment @ 6%: 1,199.10

With the Bailout failure
3% margin to the LIBOR 4%
New payment @ 7%: 1,330.60

The failure yesterday instead of later in the week will send their payment from $1,073 to $1,330 per month.  Or if you are on a regular adjusted LIBOR Loan, your payment will be $130.00 higher starting next month.


Subprime credit homeowner
$200,000 loan balance
5% current interest rate (ARM)
1,073.64  monthly payment

With the Bailout signed
5% margin to the LIBOR 3%
New payment @ 8%: 1,467.53

With the Bailout failure
5% margin to the LIBOR 4%
New payment @ 9%: 1,609.25

The failure yesterday instead of later in the week will send their payment from $1,073 to $1,609 per month.

The increase in interest rates across the board will reduce the amount of home a person can buy, thus putting presure on sellers and buyers.

Restriction in the credit markets will continue to get worse.Thus making our part more important to the parties.

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Use our Investor's Funds to flip Short Sales @ 1% fee

    Last night, I introduced a new program to The Platinum Membership.  Our primary Private Investor will advance you the cash you need in order to buy Short Sales.  Here's the exciting part, he will only charge you a 1% fee per transaction.  To see just how incredible this opportunity really is.....

    Let's say you find a home that you can buy for $100,000 from a homeowner facing foreclosure, this is the short sale price agreed to by the Lender.  Let's also assume that you have a buyer willing to pay you $170,000 for this home and he/ she has already qualified for the financing.  Our investor will only charge you $1,000 (1%) (plus $300 per deal) to use their money to acquire this home.  The rest of the profit, $70,000...is yours to keep.  And the great thing is that you don't have to come out of pocket with their fee, it's paid out of your $70,000 profit at closing.

    This is unheard of in the investment world. If you were to borrow this money from a private investor or a partner, you could easily give up 50% of your profit just to due this deal.  One deal like this could change your life forever.

Attend my next Live Webinar or go to www.CashInWithJohn.com to take a Free Tour and see for yourself.

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Now use our Investor Funds to Flip Shortsales. They put up the money when you get a buyer lined up using our Owner Financing Program found at www.cashinwithjohn.com. Split the profits 50/50. Buying shortsales at 50% of appraisal is common right now. Don't let this market pass you by.

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New times for HSA Live Webcasts

We have changed the webcast times to increase the Biz Opp broadcast and to make the calls flow correctly.

Retail Seller's Webcast/Call is now done only on Tuesday at 9:30 pm EST
The Business Opportunity Webcast/Call is held every Tuesday and Wednesday at 8:00 pm EST.
The call times have been updated and are under the videos on the web page at www.weprovidethecash.com and on all your affiliate pages.

The weekly HSA Training Call is held at 9:30 EST on Wednesdays. 

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Flock & Blog

I'm really crazy about this new browser out called Flock It's made blogging super fast and easy for me. As we all need to be blogging in the internet marketing arena, this makes it easy. Besides putting all the best social networking links and tools into an easy to use sidebar, you can grab text and pics from site while viewing them and it stores them in a side bar for instant use in your blog. Or just drop and drag elements out of open web pages into your blog.

Download Flock and allow it to import all your normal links etc. Then visit any of your social network sites or blogs and it auto fits them into an easy to navigate and access sidebar.

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Besides raising the down payment to a minimum 3.5%, FHA is also tacking on an extra 1.75% in upfront mortgage insurance to borrowers.

But, the good news is that sellers can pay this 1.75% as part of closing costs to reduce money needed from buyers.

*****

HUD has just announced a new mortgage insurance premium structure to take effect on October 1, 2008.Upfront Mortgage Insurance Premiums

• Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75 Percent

Read the new Rules HERE.

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Home Seller Assist RANK 194,192




Alexa Web Page Ranking shows we have now moved to the 194,192 most visited site in America. This is awesome. Out of many millions we have a TOP RANKING. That means there is a HUGE need that this site and our service is providing. You can earn big money by joining now during our launch.

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Since Last Friday, the Secondary market for real estate loans has been rocking and reeling from the FannieMae loss and announcements. Expect to see major tightening of credit across the board affecting every lender and mortgage broker in the US. This looks like a repeat of last August where even good loans were being turned down while the Secondary markets regrouped.

This kind off situation typically brings a new round of home price lowering. I expect this to occur within the next month. Being creative in the RE market is a must. These turns in the market bring the greatest opportunities for those in the right position. Foreclosures will continue to flow into the market. The time pick the best deals is now and into the winter.

Great news for IP Flippers. Only companies that buy in great bulk from banks can flip without regard to the 90 Day Seasoning. This means that the IP is still the only way to flip homes when faced with a seasoning issue... which is on all transactions.

The temporary waiver of the property flipping rule will permit lenders to more easily sell properties acquired as a result of foreclosure to homebuyers who use FHA financing. Both lenders and the property disposition firms they hire (or with whom they are affiliated) are now exempt from the 90-day lock-out period that once prevented homebuyers from using FHA financing to purchase properties that were owned by an individual/entity that held the property for less than 90 days. Under the new waiver, homes that were foreclosed on and are being sold by the mortgage holder or on its behalf may be purchased by FHA borrowers without regard for the 90-day seasoning period. To prevent future flipping of any properties purchased through the foreclosure sales, the subsequent sales of the properties will continue to be subject to the standard regulatory requirements - lockout for the first 90 days and two appraisals required to justify any increase in value of 100% or more for sales that occur within 90 to 180 days.

Seller Financing Lines

Seller Presentation

"Lines" You Can Use

 

 

1. History: Saxton has been assisting homeowners sell their own homes since 1997. And is one of the US's largest and oldest owner financing purchasing companies.
   

 

1. We use a system that keeps the buyer from shopping homes on homeowners. By controlling the financing, buyers MUST work with you only.
   

   
    

2. I will provide you complete paperwork including the contracts and credit applications to use with buyers. I will walk you through a mock showing and contract signing. I will provide you our Important Classified ad and sign text that is designed to get your phone ringing with buyers that will place a signed contract on your home in just one showing.
   

 

1. I am always a phone call away to answer any questions and help you through the process. I will also assist you on any owner financing processing with Saxton. I will work with the attorney or Title Company to make sure any owner financed transaction goes smoothly.
   

 

1. There is no contract to sign with us and you can just ADD our method to your existing home sale method. There's no risk to you.
   

 

1. We will be setting you up to submit your buyers directly into the funding sources by fax. This is what gives you the right to advertise "Owner will Finance". It is just a matter of faxing in the credit application and credit report provide by the buyer, and the funding sources do the rest.
   

 

1. The sources at Saxton can even help people with credit scores as low as 500 as long as they meet a few common sense requirements… like a job and some rent history.
   

 

Your options:

1. Sell it yourself: You compete with every real estate agent in town; you compete equally with every other for sale by owner in town.
   
2. Buyers will expect you to drop your asking price since you don't have a realtor handling the sale. Buyers look at 14 homes before negotiating and buying a home. So this result in you having to show the home many times and at all times of the day. 70% of people who try to sell it themselves give up within a few weeks and hire a realtor to try and sale the home.
   
3. Realtor listed: You must tie it up for at least 3 months. You hope you get a good salesperson, but can't really know for about 3 months. You are still competing with every other home on the market for the same few buyers. You must pay 6% to the realtor, plus a negotiated price the buyer finally comes agrees to. Typically that is 4-8% below the asking price. This means 10-15% off the appraised price. For every 12 homes on the market this month, only one will sale. It takes an average of 6 months to find a buyer. This method usually involving dropping your price during the first 2 months then negotiating further down from there. This means a 13-20% less than the appraised price. The longer the home is on the market, the harder it is to sell.
   

 

1. Every month that a vacant home stays on the market, it costs an amount equal to the monthly payment and that amount is lost forever. It becomes a cost of selling the home.
   

 

1. Usually, there is no one else in your area that is offering owner financing, this brings you a captive audience of buyers that can't buy anywhere else. They won't try to negotiate the price because they are competing with so many other buyers for the home. They sign an immediate offer for the home because of the competition for an owner financed salutation. The buyers will put up earnest money with their signed offer of between $500.00 and $1,500.00; this allows you to control the sale. (The earnest money is made out to the Title Company (or attorney)).
   

 

What we do is work with you to structure owner financing that we then purchase from you at closing paying you full face value for the financing. Owner financing is what really sells the house quickly. If you can place the words "Owner Will Finance" in your classified ad and on your sign, then you will get a steam of buyers placing offers on your house and out of about a week or two of these offers you should have a buyer that qualifies and can close. We help you with 2 main sources of financing; both an owner carried note situation in which we then buy the note and also through our challenged credit referral sources which specialize in funding very difficult deals.

The buyers come in at a disadvantage in that they need you more than you needing them. This allows you to demand and get full asking price with no negotiation on the price. Our typical owner carried note structure is a 95% loan with a 5% down payment amount. You then sell to us at a 10% discount off the loan's full face value.

 

 

 

 

 

 

 

 

 

 

 

A Great MasterMind Team Can Make you $$$

Everyone needs a team to be successful. I have a team, and everyone that I know who is successful, has a team.

When building a MasterMind Team in the Real Estate Investor Field use these guidelines:

General Questions/Checklist:
For each person you are thinking of adding to your team, ask the following questions (Some team members may have additional specialized questions.):

• Experience
  

1. How much experience do they have in delivering the results you are seeking?
   
2. What experience do they have with specific issues you will have?
   
3. What is the average income and experience of their clientele (Is this your goal?)
   
4. Do they personally have experience in your business?
   
5. Are they at an income level similar to where you want to be?
   

• Education
  

1. Do they have the educational requirements for the job?
   
2. Do the have the professional credentials for this role?
   

• Compensation
  

1. How are they compensated?
   
2. Do they have a vested interest in helping you succeed?
   

• Client Contact
  

1. How do they keep in contact with their clients?
   
2. Is their response time comfortable for you?
   

• Your Needs
  

1. What can this person do to help you meet your goals?
   
2. Are you looking for someone to model?
   
3. Do you expect to be educated by this person?
   
4. If yes to No. 2 or No.3, how would this person do this?
   

   www.paperbiz.com
   

FHA now makes it official… how to use non-traditional credit tradelines

April 29, 2008

 

MORTGAGEE LETTER 2008-11

 

 

TO:        ALL APPROVED MORTGAGEES

 

 

SUBJECT:    Nontraditional Credit Verification and Evaluation

 

 

The Federal Housing Administration (FHA) has long permitted mortgage lenders to establish a borrower's credit history through nontraditional means, including the compilation of performance on rental payments; utility bills; telephone and cellular phone services; cable television service; payments to local stores, etc. This is further described in handbook HUD-4155.1 REV-5, paragraphs 2-3 and 2-4B.

 

This practice is appropriate when the borrower has insufficient trade lines with Equifax, Experian, or TransUnion and a credit bureau score cannot be derived. Mortgage lenders also may use nontraditional credit verification to augment "thin-file" credit reports where a credit score was generated but based on only a few trade lines. However, nontraditional credit reports may not be used to enhance any poor credit history on a traditional credit report.

 

This mortgagee letter provides guidance to lenders and underwriters for establishing and evaluating nontraditional credit histories and also describes FHA's acceptance of those enterprises that can develop a verifiable credit history, no less than 12 months in duration, for borrowers with limited traditional credit. This guidance is effective immediately but must be considered for borrowers without traditional credit beginning with case numbers assigned 30 or more days after the date of this mortgage letter.

 

Nontraditional Credit—Basic Guidance

 

The following provides guidance in establishing that a borrower has sufficient credit references for evaluating bill paying habits, which include: three (3) credit references, including at least one from Group I, covering the most recent 12 months activity from date of application. Group I references should be exhausted prior to considering Group II for eligibility purposes, as Group I is considered more indicative of a borrower's future housing payment performance. Borrowers with no Group I trade references will be underwritten using the criteria set forth under "insufficient credit" below.

 

Group I – rental housing payments (subject to independent verification if the borrower is a renter), utility company reference (if not included in the rental housing payment), including gas, electricity, water, land-line home telephone service, cable TV. If the borrower is renting from a family member, request independent documents to prove regularity of payments, such as cancelled checks.

 

Group II – insurance coverage, i.e., medical, auto, life, renter's insurance (not payroll deducted); payment to child care providers – made to a business providing such services; school tuition; retail stores – department, furniture, appliance stores, specialty stores; rent to own – i.e., furniture, appliances; payment of that part of medical bills not covered by insurance; Internet/cell phone services; a documented 12 month history of saving by regular deposits (at least quarterly/non-payroll deducted/no NSF checks reflected), resulting in an increasing balance to the account; automobile leases, or a personal loan from an individual with repayment terms in writing and supported by cancelled checks to document the payments.

 

Verifying Nontraditional Credit

 

We prefer all nontraditional credit references be verified by a credit bureau and reported back to the lender as a nontraditional mortgage credit report (NTMCR) in the same manner as traditional credit references. A NTMCR is designed to assess the credit history of the borrower without the benefit of institutional trade references and should format as traditional references – including creditor's name, date of opening, high credit, current status of the account, required payment, unpaid balance, and a payment history in the delinquency categories of 0x30, 0x60 etc. It should not include subjective statements such as "satisfactory, acceptable, etc."

 

Only if a NTMCR is impractical or such a service is unavailable may a lender choose to obtain independent verification of trade references. Documents confirming the existence for a nontraditional credit provider may include a public record from the state, county, or city records, or other means providing a similar level of objective confirmation. To verify the credit information, lenders must use a published address or telephone number for that creditor and not rely solely on information provided by the applicant. Rental references from management companies with payment history for the most recent 12 months may be used in lieu of 12 months cancelled checks. Credit references may also be developed via independent verification directly to the creditor. If a method is used to verify credit information or rental references other than NTMCR, all references obtained from individuals should be backed up with the most recent 12 months cancelled checks.

 

In addition, FHA has no objection to the use of various service providers now operating that are able to develop a bill payment history, as well as a score by obtaining rental payment history, utility trade-lines, and other common recurring non-reporting bill payments. While we do not endorse any particular service provider, FHA approved lenders may use such services to develop a credit history for borrowers with no or little traditional credit.

 

 

 

 

 

Evaluating Nontraditional Credit

 

The following offers guidance in evaluating borrowers with nontraditional credit histories. A satisfactory credit history, at least 12 months in duration, is to include:

 

• No history of delinquency on rental housing payments
  
• No more than one 30-day delinquency on payments due to other creditors
  
• No collection accounts/court records reporting (other than medical) filed within the past 12 months
  

 

Insufficient Credit

 

The following offers guidance in evaluating borrowers with no credit references, or otherwise having only Group II references. A satisfactory credit history, at least 12 months in duration, is to include:

 

• No more than one 30-day delinquency on payments due to any Group II reference
  
• No collection accounts/court records reporting (other than medical) filed within the past 12 months
  

 

    In addition, for such borrowers, to enhance the likelihood of homeownership sustainability, the following underwriting guidance is being provided:

 

• Qualifying ratios are to be computed only on those occupying the property and obligated on the loan, and may not exceed 31 percent for the payment-to-income ratio and 43 percent for the total debt-to-income ratio. Compensating factors are not applicable for borrowers with insufficient credit references.
  
• Borrowers should have two months of cash reserves following mortgage loan settlement from their own funds (no cash gifts from any source should be counted in the cash reserves for borrowers in this category).
  

 

 

If you have any questions regarding this Mortgagee Letter, call 1-800-CALLFHA.

 

                        Sincerely,

 

 

 

 

                        Brian D. Montgomery

                        Assistant Secretary for Housing-

                         Federal Housing Commissioner

 

Subject-to and Land Trust Insurance Warning

As most of you know, I'm not a big fan of doing these kinds of deals, but there certainly is reason to do them under many situations. I address the methods of doing these kinds of flips in the Member's Training Area. This item is a caution on how you handle the Fire and Hazard Insurance. From my investor friends in Florida who know too well what happens when you go by to pick up the monthly payment in August and the house has floated down the block.

If disaster hits, there is a very real risk that the insurance company will point out to you then that by placing the property in a Trust (or sold via subject-to), legal Title did, in fact vest to a new owner. They will now argue that the existing policy where the previous owner (by name; i.e. John Smith) is mentioned as insured, is no longer valid.
Even though you are mentioned as co-insured, the reasoning is that John Smith is on record as the legal owner, and as Title is no longer in his name, the policy is no longer valid.
So, no check for you dude!

Here is the solution:
The only way to avoid this is to cancel the old policy, then take out a second Landlords Policy, listing as beneficiaries: "Bill Investor, Trustee for the John Smith Family Trust and Beneficiaries ATIMA".
ATIMA stands for As Their Interest May Appear.
You need not add the Lender here, although keep in mind that as your new Policy is the only one that is valid, the Lender will come knocking when a hurricane or fire strikes.

There's some more to it than that, but the lesson is this.
-1- Cancel the Old Policy
-2- Put a New Policy in Place naming the Trust as insured, as it is on Title now.
-3- Set it up in escrow, just like the previous one.
The Lender will be informed by the Insurance Company, and they will set up the paperwork.
As we use the Seller's name in the Trust, the Lender "most likely" will not see any reason to invoke the DOS clause.
We always have the Seller sign a document anyway where they inform the Lender that they have placed their Property in a Trust for Estate Planning purposes, so this should work just fine.

Owner Financing Details

http://www.johnalexanderhome.com/Level2/Updates.html Link to the member's Training Call on how to structure owner carried notes that we will buy at closing. Doc's required etc are taught in the call. Below is a highlight of a typical structure.

Suggested Owner Carried Note Structure:

$300,000 maximum note amount

Down Payment: 5% (can be gifted through Ameridream or other DPA program)

Loan Amount 95%

Term: 30 Year Fixed

No Balloon

Interest Rate: Determined on approval (range 9.9% goes down to 4.5%)

Note purchased at a 13% discount normally

Owner Financing Note Purchase at Closing

Sell quicker and at top price by offering owner financing to your buyers. We then buy the note at closing. Credit scores down to 500. Get all the details on today's Training Call for Level 2 Members.

Fannie Mae Withdraws Declining Market Policy

Fannie Mae just announced a withdrawal of their declining market policy! To quote from Announcement 08-10, "Lenders are no longer required to make a downward adjustment to the LTV, CLTV, or home equity CLTV (HCLTV) based on the location of the property." Per Fannie Mae Announcement 08-10, dated May 16, 2008:

1. Fannie Mae withdraws their declining market policy effective 6-1-08;
   
2. Declining market policy is replaced by a "National Down Payment' policy which reduces maximum allowable LTVs for 1-unit primary residences;
   
3. 95% is the maximum LTV, CLTV, HCLTV for manually underwritten loans;
   
4. 97% is the maximum LTV, CLTV, HCLTV for DU underwritten loans, including MyCommunityMortgages® and Flex mortgages;
   
5. CLTV of 105% with Community Seconds® is still allowed;
   
6. Effective date is for applications taken on or after June 1, 2008.
   

blog agent course

We are forming our new Level 2 package this week. It will now consist of the Inverse Purchase and the Real Estate Joint Venture Course.  This will allow you to flip homes via the IP method through local or nationwide real estate agents.