If you’ve read my blog for any period of time, you know I’m not a fan of the Obama administration.  And their latest attack on the rights of small real estate investors - like YOU and ME - does nothing to change my opinion.  I’m going to tell you what has happened, and I’m also going to tell you what you can do about it, because it’s not too late to turn it around.  This is critically important - please read the whole post - it’s truly urgent.

Here’s what’s going on:

Obama’s team at the Department of Housing and Urban Development (HUD) has proposed new regulations that will eliminate YOUR RIGHT to sell your properties via owner financing.  The only exception to this is if you RESIDE in the property that you want to finance, or if you are a licensed mortgage originator.

The net effect is that those of you who rely on any type of seller financing in your real estate business will be OUT OF BUSINESS.  That’s right:  the classic investor business strategy of acquiring property and reselling it via owner financing will become ILLEGAL.  Obama’s team will have made you a criminal for using a strategy that is fundamentally wise and is a positive opportunity for every party that’s involved.

This will also instantly destroy the businesses of many real estate investors whose entire business is based around the idea of buying seller-financed real estate notes.  If these new regulation proposals are approved, this business model will die instantly.

I’ll spare you the details of why I think that Obama’s team is trying to illegalize a well-established strategy that has been used by real estate investors and their buyers for hundreds of years.  But this is a very important point:

As of this moment, these proposed regulations are not the law, they are merely proposed regulations.  With immediate action, it’s not too late to turn this very bad regulation backwards before it is enacted.

Real estate lawyer Bill Bronchick recommends these steps:

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How YOU can help:

We desperately need for thousands of real estate investors across the country to go on record with HUD on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD!  We have less than one week to flood this system with comments.

Follow these simple steps:

1. Logon to http://www.regulations.gov.  You will see two white boxes for searching
2. On the left box labeled “Document Type”, pull the menu down and select “proposed rules”
3. On the right box labeled “Enter keyword or ID”, enter “safe mortgage”. Then, press search
4. Locate the blue search result “FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ….” To read the rules, click on this title. You will be taken to another page. You will see “views”.  You can click on PDF file or another symbol which will show you the rule document online.
5. On the right of the screen, click on “submit comment”
6. Complete the form providing required information and your comments and then submit

What do you say?

Say what you feel, but say it politely!   The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.

Make your voice heard!

Bill Bronchick, Esq.

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Please follow these steps and enter your comments on the government website right away.  It’s imperative that thousands of real estate investors resist this foolish intrusion into our rights as private property owners.  Please take just a few minutes right now to protect your own ability to use owner financing in your real estate business.

Obama’s team at HUD clearly want to take your rights, but you don’t have to sit still and take it.  Respond now.

Thank you for reading http://realestate.BryanEllis.com.

Sometimes, saving money on your mortgage is as simple as picking a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time. They are a lender's prediction of what mortgage markets will look like at some point in the future.

The future is murky, of course, so it follows that the longer the rate lock, the higher the bank's corresponding interest rate.

Banks have to compensate for "time risk".

Rate locks typically come in 15-day increments with the 30-day lock serving as the basis for all other pricing:

• 15-day rate lock : 1/8 percent lower than the 30-day rate lock
• 30-day rate lock : The basis for all other pricing
• 45-day rate lock : 1/8 percent higher than the 30-day rate lock
• 60-day rate lock : 1/4 percent higher than the 30-day rate lock

These aren't exact figures, of course. Spreads between rates can (and do) vary from lender-to-lender. On average, though, they're fairly close.

This is why choosing a closing date is so important to your mortgage rate. A 45-day closing may reduce your rate 0.125% versus a 46-day one.

Assuming a $250,000 home loan near today's rates, that's an annual difference of $236.

So, when negotiating a contract on a home, keep in mind how rate locks work to make sure you get the best rate possible. The shorter the length of your rate lock commitment, the more money you might save long-term.

Mortgage rates are suffering through another volatile week, causing problems for rate shoppers and home buyers.

After falling Monday and Tuesday, mortgage rates surged Wednesday and Thursday. The momentum higher appears to be carrying into the weekend, too.

There are several data-related reasons for the mortgage market's spastic activity this week:

1. Unemployment claims fell
2. Leading Economic Indicators rose
3. Inflation readings are tame

But while each of the data points above fueled mortgage rate volatility, it's not the data that's making markets move the most. It's the psychological impact of the data.

See, data tells us about the past. It measures and reports on what's already happened. Unfortunately for rate shoppers, mortgage markets are not made on data from the past -- they're made on the expectations of what will happen next.

Mortgage rates reflect Wall Street's opinion of the future.

In reading the papers and watching the news, you'll notice ongoing debate about the U.S. economy. It's unclear whether the recession is worsening or improving.

On one hand, data is weak and sub-optimal. On the other hand, the data is not nearly as weak as it was 6 months ago and, in some cases, it's strong. To some, this is a signal that a recovery is already underway.

Or, it may just be a blip.

We can't be certain in which direction the economy is headed and the same can be said for mortgage rates. Because sentiment is changing so often, though, it forces us to be on our toes.

The last few months have been marked by large mortgage rate swings across small windows of time. A rate that's offered in the morning, for example, is rarely available in the afternoon. Therefore, do your rate shopping in a compressed period of time and be ready to lock your rate at a moment's notice.

When markets move, they tend to move quickly.

The topic of Bulk REO Investing has really gotten a lot of attention lately, and with good reason.  “Bulk REO Investing” refers to making profit by buying and selling groups of REO (foreclosed) properties as a unit rather than individually.  For investors who are well educated about Bulk REO investing, this can lead to some truly significant real estate profits in just a short period of time (see below).  But there are some things you need to know about Bulk REO Investing before you jump in with both feet:

First: The excitement over Bulk REO Investing is justifiable.  Imagine being able to flip a large group of properties from one seller to one buyer and capture a large spread (frequently $50,000-$100,000+) in the middle.  That’s exactly what Bulk REO Investing can do for you - if you’ve got the qualifications, which leads to the second point:

Second: Bulk REO Investing does require access to significant amounts of capital.  Even small Bulk REO deals will require several hundred thousand dollars of funding.  If it’s your money, you could make very large profits very quickly since Bulk REO buyers tend to get very large discounts off of the remaining principal balance values.  But even if you don’t have money, there are some very well-capitalized investment firms that may be willing to back you and pay you a handsome fee for every deal you bring to them (I know of one hedge fund that will provide a $2 Million Proof Of Funds for serious investors).

Third:  Most of the Bulk REO Packages you see advertised on the internet are absolutely worthless.  Your “B.S. detector” should go off whenever you hear about “compilers” or “seller mandates”.  According to Bulk REO expert Sal Buscemi, these things are virtually never worth considering, as is the case with “Billion-Dollar REO Portfolios” which make for great posts on Craigslist but are routinely ignored among financial professionals.

Fourth and finally:  Realize that the best sources of Bulk REO deals are frequently people in your immediate area.  In fact, I saw a really great training video about 3 great sources for Bulk REO deals that you might want to check out here:  Bulk REO Investing Training Video.  (One of the sources - hard money lenders - was so simple yet so brilliant that it will take the average real estate investor less than 10-20 minutes to have a legitimate list of prospects.)

But let’s be clear:  Bulk REO Investing is like every other part of the real estate investing business:  Proper training is crucial, particularly considering the very large dollar investments necessary.  If you’re interested in learning about this business, I recommend working with an investment firm that will train you and provide funding for your transactions.  Here’s one I recommend:  Bulk REO Investment Training.

Thank you for reading RealEstate.BryanEllis.com - your comments are welcomed below!

The unemployment report was just released for October, and the news isn’t good.  Approximately 240,000 jobs were lost in the month and the unemployment rate has hit 6.5%.

Traditionally, an unemployment rate of 5% is considered “full employment”, so the news might not be as bad as we’re being led to believe.  Regardless, this is an issue that real estate investors - and particularly landlords - want to be aware of, since it could be your tenants who lose their jobs.

When your tenants lose the ability to pay you, the key is quick and decisive action.  But you must know when such a change happens before you can act on it.

I was thinking about this issue this morning and came to the conclusion that it would be ideal if there was a way to know as quickly as possible when a tenant has lost his/her job.  That way, you can be prepared to act quickly in the way that’s most appropriate.

Please note: What I’m about to describe to you are ideas in the embryonic stage.  I’ve not tested them, and I’ve not confirmed them with legal counsel.  I’m posting them here because I think it’s well worth considering, and it’s also possible that someone among the thousands of readers of this blog may have already implemented a similar idea and could tell us about it.  So here goes:

Here are a few ideas to be able to know quickly if your tenants have lost their job:

• Send a notice to all of your tenants that you have some sort of “Assistance Program” in the event of the Tenant’s being laid off, but that they must notify you within 3 (or whatever #) of days of their termination.  (It’s up to you what your “Assistance Program” entails - maybe you reduce rent slightly, or maybe you connect the tenant with an employment agency… that part is your choice.)
• Require your Tenants to disclose their employer to you at the time they sign their lease with you, and require them to notify you within a short period of time any time their employment situation changes.
• If your lease enables you to change its terms, consider doing so for active leases, and require the tenant to notify you of employment changes

These are the 3 ideas that I’ve come up with so far.  I’m very interested to hear your ideas on how to deal with the issue of a suddenly unemployed tenant.  If you would be so kind as to share your experience, we’ll all be grateful.  Also, feel free to share with us exactly how you use the information that your tenant has lost their job.

Thank you for reading RealEstate.BryanEllis.com!