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SAFE Act & EPA Lead Based Paint Law

Brad Simmons — Tue, 15 Feb 2011 22:00:53 +0000

Tuesday, March 8, 2011
Springhill Suites
863 S. Broadway
Lexington, KY 40504
7-9PM

Speakers Harry Borders and Mike Butler
SAFE Act & EPA Lead Based Paint Law

Is it illegal to sell your own property?

Brad Simmons — Thu, 29 Jul 2010 11:50:52 +0000

Kentucky Association of REALTORS

This article was written by Harry Borders, a residential real estate attorney in Louisville, KY.

Owner Financing and Private Financing Significantly Impacted by the S.A.F.E. Act.

On July 30, 2008 the Federal S.A.F.E. Act (Secure and Fair Enforcement for Mortgage Licensing Act of 2008) was signed into law. The federal SAFE Act is a law that gave the states one year to enact their own legislation for the licensing of residential loan officers, including private lenders and sellers willing to give a “mortgage loan” (i.e. carry the financing for the buyer, including contracts for deed). On June 25, 2009, Kentucky enacted our version of the S.A.F.E. Act.

Congress’ concern when enacting this legislation was that even if states identified a “bad actor” mortgage broker, he or she could just pull up stakes and move to another state. Congress observed that, without a national registration system, the states found it difficult to track such bad actors and put them out of business permanently.

The SAFE Act only applies to “residential” properties (defined by the Truth In Lending Act as up to and including a 4-plex, therefore, anything larger than a 4-plex does not apply). The thinking was that most residential purchasers (unlike commercial purchasers) are not “professional” buyers and therefore, they need protection against bad loans, whereas “professional” buyers were savvy enough to protect themselves from bad loans and therefore don’t need protection.

Unfortunately, there is no exception for “professional” buyers if they are buying “residential” properties under the Kentucky S.A.F.E. Act. Therefore, these “professional” buyers (i.e. real estate investors) also are unable to buy with owner financing or private financing unless the owner or private lender is either exempt from the rules or is a licensed loan officer. It appears that Congress intended to exempt “professional” buyers from the Act, however, when HUD wrote the Model Act (designed to give states guidance on how to draft their version of the law) which was subsequently adopted by most states, this exemption was not included in the Model Act, and thus it was not included in Kentucky’s version.

The SAFE Act requires the establishment of a national tracking system, and requires states to adopt statutes meeting certain minimum standards for registration, for continuing education, for criminal background checks and the like. Under the SAFE Act, all states must implement licensing systems that require Mortgage Loan Originators (including private lenders and seller’s willing to carry financing) to:

- Provide fingerprints for an FBI criminal history background check;

- Provide authorization for Nationwide Mortgage Licensing System and Registry (NMLS&R) to obtain a credit report;

- Input and maintain their personal Mortgage Loan Originator record in NMLS&R as their license in each state in which they wish to conduct loan origination activity;

- Pass a national mortgage test;

- Take 20 hours of pre-licensure education courses approved by NMLS&R.

The Act allows for fines of between $1,000 and $25,000 for violations.

There are a few very strict exceptions to Kentucky’s S.A.F.E. Act. The exceptions are as follows:

1. A natural person (i.e. a real human being, not an LLC or Land Trust) may make a residential loan to an immediate family member (i.e. spouse, child, sibling, parent, grandparent, grandchild). However, the person cannot be compensated by a mortgage loan officer, broker or originator.

2. A seller who is a natural person may originate a mortgage loan secured by a dwelling that served as the natural person’s residence. However, the seller cannot be compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator.”

Therefore, if the seller is selling his/her residence, the transaction will be exempt from the SAFE Act. However, the exemption is very narrow – it clearly states that the dwelling must be the person’s residence. Consequently, there is not an exemption for a person financing the sale of a property that is not his/her residence. Therefore, investors or builders may not carry the financing on the sale of any of their residential real estate, provided it is not the investor or builder’s primary residence of the buyer is not immediate family.

Technically, there are other exceptions, but frankly, these exceptions are not very helpful. One such exception is for ”Other natural persons making mortgage loans from their own funds for investment without intent to resell.” However, the statute still requires these individuals to be licensed with the Kentucky Department of Financial Institutions (“DFI”). Therefore, they still must register with DFI, have 20 hours of pre-licensing education, pay the fees, etc. Realistically, this will prevent most investors and builders from being able to carry financing on their sales.

The other exception is the “attorney” exception. While there is an attorney exception, this merely exempts attorneys from having to be licensed. It does NOT allow attorneys to negotiate loans with otherwise non-exempt lenders. Therefore, this exemption also has very little benefit to investors, builders and REALTORS®.

Unfortunately, HUD has not issued its regulations regarding the S.A.F.E. Act, and therefore, we do not know the answers to many questions (such as “did I have to occupy the house immediately before closing? What if I moved out 3 months ago, do I still qualify?”). HUD is not expected to issue the regulations until possibly July of 2011.

The intent of the law has merit. Unfortunately, the law was drafted so narrowly that it now prevents most owner financing or private financing on residential properties, despite the fact that this type of financing is not what the law was targeting.

There is a push both on the state level and on the federal level to change this law. However, in the meantime, it is important that REALTORS® are aware of the law and its implications to your business.

KAR will be holding two courses on this subject at the upcoming KAR Convention & Expo in French Lick, Indiana to educate REALTORS® and provide more clarification on the issues you could be facing.

The previous discussion should not be viewed as legal advice. Please consult your attorney.

Trading Real Estate without a 1031

Brad Simmons — Wed, 21 Jul 2010 15:51:46 +0000

On the conference call last night Peter Fortunato talked about the advantages of
TRADING vs. selling real estate. In this “hard to sell ” market, sometimes trading
is the best and fastest solution. To trade real estate, you need to identify what
you want more than what you have. Then approach people who have what you want
and ask if they want to trade for what you have. Here’s an example:

Peter’s son wants to buy a house in New Hampshire. Peter has a waterfront condo
he needs to sell. So, Peter has been contacting people in New Hampshire who
have houses listed on Craigslist or FSBO sites to see if they want a condo on the
water in Florida.

You’d be surprised how many people say YES!

Trading houses does not require using an exchange accommodator, it just requires
an agreement between both parties and a meeting of the minds. There does not
need to be equal equity. If someone has something you want more than what you
have and visa versa, then a trade deal can happen. You could trade 3 smaller houses
for one bigger house to reduce management or trade one big house for 3-4 smaller
houses to increase cash flow.

Trading real estate all starts with deciding what you WANT versus what you HAVE.

If you’re having a hard time selling a house, start thinking about what you WANT instead,
then go find it and start asking people if they want to trade.

Acquisition Class – why NOW is the time by Pete Fortunato

Brad Simmons — Mon, 24 May 2010 14:26:42 +0000

Pete Fortunato will present two days of lecture and of discussion, with case studies, regarding How to Acquire Real Estate – and why NOW is the time. Questions and Debate encouraged! June 12-13 in Tampa – Allegiant Air = LEX to TAMPA $120 round trip. Come join us!

Self Storage with Scott Meyers June 1, 2010

Brad Simmons — Wed, 05 May 2010 11:05:11 +0000

SELF STORAGE FACILITIES ARE “CASH COWS!”

Scott Meyers Says…

“Join Us and Learn”…

“How I built a $10,700 positive monthly cash flow in real estate without the hassles of tenants and toilets, and the top 10 reasons why Self Storage is the hottest sector in commercial real estate over the past 30 years that practically nobody has heard about”.

* The endless opportunities available in the over 60,000 facilities nationwide.

* The 2 reasons Why Demand is projected to Skyrocket in the next 10 years and

* Why Self Storage Facilities are “Cash Cows”.

* Why they have outperformed all other forms of real estate over the past 30 years,

including Homes & Apartments.

Scott Meyers, CSSM©, is the nation’s leading Self Storage educator. He travels the country revealing why Self Storage has become the hottest sector in Commercial Real Estate over the past 30 years that virtually nobody has heard about. Practically every real estate investor and entrepreneur has uttered the words “I’ve always wondered about Self Storage, I’ve heard those things were cash cows”. It was only after becoming a penniless millionaire in the single family and apartment business, and a near bankruptcy experience managing several hundred tenants and toilets that Scott asked himself that very same question.

As a result of his research and 16 years experience, he’ll reveal the Top 10 Reasons to invest in Self Storage NOW, and why he dumped all his single family houses and apartments and built a $10,700 positive monthly cash flow his first year in one of the best kept secrets in real estate: Self Storage! He’ll share:

You won’t want to miss this opportunity to change your life, and the lives of your entire family tree with his powerful message and strategies.

Scott Meyers, CSSM is the owner and President of Alcatraz Storage® which operates several Self Storage Facilities in the Midwest. Scott is a Certified Self Storage Manager (CSSM©) through the National Self Storage Association and has been a real estate investor since 1993. He was an instructor of the Landlord 101 course through the University of Indianapolis and now Scott Speaks to Investor groups nationwide and has students around the world, but mostly enjoys spending time at home with his wife and 3 young children in Indianapolis, Indiana.

Tuesday June 1, 2010 7:00PM

Greater Lexington REIA

Crown Plaza / Campbell House

375 S. Broadway, Lexington, KY 40507

www.lexreia.org / email: glreia@live.com

Open to the public

How to Build Financial Friends

Brad Simmons — Mon, 03 May 2010 11:17:24 +0000

WAYS TO BUILD FINANCIAL FRIENDS

Help A Friend Fund His or Her Retirement Plan

Many are worried about money for retirement. Most are still counting on the government to bail them out with Social Security. It’s a bad bet.

Once you learn to invest profitably, then you are in a position to help your friends and family build a retirement fund that does not rely on the government or a corporate pension.

Step one, learn to make money consistently and safely in today’s market. Today the opportunities are many, and the competition for good deals is less, but you need to be good at what you do before you invest retirement money for others.

My Dad came to me when he turned sixty and said he had just realized that he would not have enough money when he retired. I helped him buy four houses. He worked until he was 70, and at that time we sold off one of the houses and paid off much of the other debt. He had three paid for houses through his eighties and that income made a significant difference in his lifestyle.

Start A Roth And Help One Of Your Previously High-Income
Friends Start One – Then Borrow From Them On Great Terms

One thing most everyone agrees on is that income taxes are going to increase. Tax-free income from a Roth Account will become even more valuable. Who do you know who made too much money to qualify for a Roth in days past, but this year could qualify. Take them to lunch and teach them a little about the potential of a Roth account.

Most accountants and attorneys don’t get the significance of a Roth for a couple of reasons. First they make too much money to have one, so they have no personal interest. Second, they along with much the world think that a Roth is just too small to mess with. The truth is once you learn how to make high returns on your money, a Roth can grow to a significant amount and then provide you enough tax free income to live on the rest of your life.

New Lead-Based Paint Rules

Brad Simmons — Sun, 25 Apr 2010 13:59:44 +0000

Interesting new federal requirement for rehabbers…

I wanted to quickly inform you of new lead-based paint guidelines released by the EPA and enforceable as of April 22nd.

This will be important for Realtors, contractors, investors, and property managers. Please spread the word. According to the EPA:

“Beginning April 22, 2010, federal law will require that contractors performing renovation, repair and painting projects that disturb more than six square feet of paint in homes, child care facilities and schools built before 1978 must be certified and trained to follow specific work practices to prevent lead contamination.”

http://www.epa.gov/lead/pubs/leadinfo.htm#remodeling

Removal of lead paint is similar to mold removal. There do not appear to be any new disclosure forms but there is potential risk/liability including a large fine if caught violating these guidelines.

The onus ultimately resides on contractors that are trained and certified in new mediation practices. Please take the time to read the EPA’s website and take a look at the National Association of Realtors website below and get informed.

***National Association of Realtors Videos and Resources on the New Lead-Based Paint Rules:

http://www.realtor.org/government_affairs/lead_paint_main

***EPA Info for Contractors: http://www.epa.gov/lead/pubs/renovation.htm#contractors

***EPA List of Certified Prfessionals http://cfpub.epa.gov/flpp/searchrrp_firm.htm

Yeiter & Company, PC

http://www.yeiter.com/

George M Yeiter, CPA
Office: 713-943-1040
Cell: 713-582-6482

Is Education Worth the Time, Trouble and Expense?

Brad Simmons — Sat, 17 Apr 2010 11:40:04 +0000

Folks often ask why we STILL attend – after investing in real estate for more than 15 years – so many meetings, seminars and get-togethers.

Before we answer this question, let’s first look at how many events Kim and I attend regularly.

Everything begins with the local REIA (Real Estate Investors Association) – in our case, this is Buddy Corbin’s North Metro REIA (NorthMetroREIA.com) that meets in Acworth, Georgia. We attend each month’s get-together as well as many of the workshops. In addition, you’ll often see us at the Cartersville sub-group meetings.

Kim is in the women’s-only subgroup. I’ve tried to join this group but they say I look strange in a wig and high-heeled shoes. Personally, I think they’re W-R-O-N-G! I’m hot, they know it, and they’re just J-E-A-L-O-U-S!

Kim is also part of the Georgia Short-Masters group.

I’m in the men’s-only subgroup. This group involves real estate discussions, a deck of cards, me losing way too much money each month, and as far as I’m concerned, far too much card cheating and nose picking!

I also attend the Trailer Park Kings meeting. This group is made up of three very experienced, savvy park owners and me. I’m the comic relief, the dumb-questions-asker, and since I don’t drink, the designated driver.

Kim and I are part of the Real Estate Masters group that meets twice a year in Kentucky and is wonderfully hosted by Brad and Cindy Simmons.

Two years ago, Kim and I began holding monthly get-togethers at our horse ranch in Adairsville, Georgia. We jokingly call it REIA Rancho. Normally, between 30 and 50 investors gather at the ranch to discuss creative deal-structuring techniques.

As to the seminars we attend: Our main teachers are Dyches Boddiford (Assets101.com) and Pete Fortunato (PeterFortunato.com). These two giants are the best of the best. You’ll also see us at several John Adams (Money99.com) seminars each year. John was our first teacher and got us started. We love him!

So why do we attend so many meetings? Easy answer: When Kim and I were new investors, we didn’t know what we didn’t know. We couldn’t creatively structure our way out of a wet paper bag.

To do a deal, we would find a property, go to closing and get a 30-year, fixed-rate, high-interest, institutional mortgage. A year later, after being forced to season the loan – and paying an additional $4,000 in closing costs – we would refinance the property into a somewhat lower-interest, institutional mortgage. Yuck!

The knowledge we’ve gained by attending so many real estate investing events has been priceless. It’s allowed us to learn how to make the impossible deals possible and has saved us tens of thousands of dollars in fees and closing costs!

Think of it this way: If you needed an operation, would you rather go to a doctor who was continually learning the latest cutting-edge techniques, or would you rather go to one who never cracked a book after med school?

Bill and Kim Cook live in Adairsville, Georgia and have been successfully investing in real estate since 1995. To learn more about Bill and Kim, please go to www.REIoutpost.com

from Steve Forbes

Brad Simmons — Tue, 30 Mar 2010 18:20:37 +0000

Home Is Where The House Is

Morgan Brennan, Forbes

01.13.10, 6:00 AM ET

Cheaper prices, tax breaks and low mortgage rates lure first-time homebuyers to settle down.

It really is a good time to buy a house.

The $8,000 credit for first-time homebuyers is still available, as is the $6,500 credit for repeat buyers, so long as there’s a binding sales contract by the end of April. These tax breaks, once expired, aren’t likely to be brought back. Mortgage rates are still low but they’re rising and some forecasters see them topping 6% by the end of the year. Home prices have stabilized; they rose for five months and then held firm, but values are way down from the peak.

“Anyone that can actually qualify–someone that has a job, can document their income, has credit to support buying a home–I would absolutely encourage to buy right now,” says Andy Firoved, CEO of Homeowner Toolbox, a housing finance company. “They would be crazy not to.”

Depending on location, values have drastically depreciated over the past 18 months, for instance, from 30% in the New York tri-state area to as much as 60-70% in areas of the five foreclosure states (Florida, California, Nevada, Arizona, Michigan). Even if the market value depreciates further, many analysts and brokers, including Firoved, believe we are close to the bottom.

Whether or not you feel pressured to buy before the federal tax rebates expires might depend on your location. Some states and counties have their own incentive plans to sweeten the deal while others don’t. The federal tax incentives are income based, applying only to single tax payers making $125,000 and married taxpayers filing joint returns of up to $225,000. Many counties and cities also offer first-time homebuyer courses geared toward potential low-to-moderate income purchasers that heap on further tax credits. New York City, Austin and Miami are just a few providing down payment assistance programs.

Mortgage rates hover at all-time lows right now as well. First-time buyers would do well to choose a fixed-rate mortgage since a buyer can lock into a low rate and never have to worry about payment increases. According to last week’s Freddie MacPrimary Mortgage Market Survey, the 30-year fixed-rate mortgage averaged 5.09% for the week ending on Jan. 7, and the 15-year FRM averaged 4.5%.

Some brokers note that smaller, more local banks offer some of the best rates for qualifying homebuyers right now. But even the national banks’ rates remain at historic lows. As of Monday, Jan. 11, JPMorgan Chase touted a 5.125% 30-year fixed rate and a 4.500% 15-year fixed and Wells Fargoa 5.250% 30-year fixed and a 4.500% 15-year fixed. Additionally, first-time homebuyers can qualify for federally backed FHA loans, putting as little as 3.5% down.

“Whether or not you put a large down payment or minimal down payment, what really matters is that you can actually afford the payment. With low interest rates it makes it more affordable–a payment you would have been paying $3,000 for four years ago might be $1,800 today,” explains Firoved.

Steve Domber, president and principal broker of Prudential Serls Prime Properties in New York state, notes that “people should be looking at the cost of owning a house rather than the cost of the house.” He finds that homebuyers in his region can buy a house today for $300,000 and that their net cost of ownership before tax deductions is about $2,000 per month, including taxes, mortgage and insurance.

One thing new buyers should be beware: property taxes. While prices of actual houses have dropped, the property tax assessments on them have not necessarily kept pace. Buyers need to do their homework and incorporate the cost of these taxes into their purchase, especially since tax assessment on the value of the property is not always automatic with a new purchase price, for example, in certain New York state townships.

Even though it’s a great time to buy a first home, analysts and brokers alike stress that a housing purchase in the current economy should be done so strictly as a principle residence–not as a quick investment to be flipped. As Liz Ann Sonders, chief investment strategist for Charles Schwab & Co. asserts, “from a broad financial planning perspective, the view on real estate is that your principle residence should not be viewed as an investment. Yes, it’s part of your personal net worth, but it’s not part of your asset allocation.”

Even before the collapse, Sonders advised people to build a 25% downside into the price of a home they want to buy: “If it were to drop 25% and you would still want the home and could afford it, the go ahead and buy.”

Bernie McSherry, senior vice president of strategic initiatives at Cuttone & Co., emphasizes that “while there is money to be made speculating in real estate once again, that play should be left for those with lots of cash and lots of patience.” As long as issues concerning affordability and the likelihood of continued employment have been properly addressed, McSherry encourages prospective first-time buyers to consider making a purchase: “As long as the goal is owning a home, not an investment, the rewards will be there.”

With such great opportunities available to the qualified buyer, the most pressing issue may turn out to be which curtains to hang in the new bedroom.

Brad Simmons

http://www.KYLandSales.com

859-319-5000

from Dave Lindahl – sage advice

Brad Simmons — Mon, 15 Mar 2010 16:57:37 +0000

In my years in business I’ve noticed three paths people take to become successful in business:

The Silver-Platter Path.

This is where success is handed to you. Mom or Dad are extremely rich, successful, or both. Some of these moms and dads then give every advantage to their kids. Maybe you got the best education money could buy and have never really needed anything in your life. If you got out of college and were handed a vice presidency at a great family firm, the odds are that you’ll be successful in business–if you don’t screw it up. Hey, more power to you.

The Inch-by-Inch Path.

At the other end of the spectrum, we have people who feel they must battle and scrape their way to success. Maybe they were told that they don’t deserve success. Maybe their family or friends said: “Who do you think you are–you think you’re better than us?” It’s almost like these people NEED to show show deep battle scars if they succeed. Then they can say “Hey, I paid the worst of prices for where I got!” I guess it’s good that they succeed, but I doubt they’ll ever enjoy their success.

The Stepping-Stone Path.

It’s my favorite. It’s for those of us who weren’t handed success on a silver platter. It’s also for those of us who are not trying to make some statement about how many pints of blood we lost on the way to our goals.

This is the path for people who know that success will take some work, but we want to use every common-sense advantage we can along the way.

We’re very interested in becoming successful, but have no interest in making success harder than it needs to be.

If you’re a “Silver Platter” person, then congratulations. I can’t help you because you’re all set. If you are an “Inch by Incher”, I can’t help you either: You need to experience lots of pain on your way to success, and I’m not into pain.

But if you’re a “Stepping Stone” kind of person, have I got some great news for you: I’m having an extremely unusual call this Tuesday, March 16th at 8pm Eastern (and ALSO at 10pm).

Talk about “Stepping Stones to Success”–my guest went from a broke, alcoholic gang member to a self-made billionaire. He became so successful and busy that when he was offered the chance to sleep in the Lincoln Bedroom in the White House, he turned it down!

I’ve gotten to know this man over the last few years, and something else stands out: He’s a nut like me for systematizing success. He loves to develop systems that other people can follow to duplicate his own success.

In some years, this guy made a half-million dollars PER DAY for the ENTIRE YEAR. Now that takes some serious systems to accomplish. He is a real “out of the box” thinker, as you’ll see on this call.

If you want some of his success mindset to rub off on you, I hope you get on this call. Again, it’s happening on Tuesday, March 16th at both 8pm Eastern and 10pm Eastern.

It’s easy to register here and choose which time is better for you:

http://www.rementor.com/teleseminar/

Dave Lindahl