Minnesota Real Estate Investors Association, Inc.

Over the past, the most common question I have heard is “what are you going to do about the Dodd-Frank Act”?  And my common responses have been, “not worry about it” or “understand it and work around it”.  So what is your response, and will you survive not that the dastardly bill that is now in full affect?

Many people are worried that this new law that has been in effect since January 10, 2014 will put them out of business.  There are many new regulations pertaining to lending and one segment in particular that affects investors the most, especially in the coming years with our current economic situation and that is seller financing.  People are worried that these new regulations will have a dramatic impact on our business, and I have heard several people predict that parts or all of the Dodd-Frank law will be repealed.

I don’t put a lot of faith in congress repealing anything these days.  Look at Affordable Health Care for instance; does it look like that will be repealed?  No, so why would you expect the Dodd-Frank Act to be any different?  The Dodd-Frank Act was a response to the sub-prime mortgage meltdown crisis to put the blame on a segment of the economy that was politically acceptable and to repeal it now would be an admission to that fact.  In an attempt not to offend certain political ideologies here, I will not get into the cause of the sub-prime mortgage meltdown crisis, or the political reasons for appealing the Dodd-Frank Act, but I will explain what it means to us as investors.

Here is the simple break down, as I understand it.
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I know you have heard about land trusts and you know that you should be using them. But I know you and you haven’t gotten around to using them yet. You believe that land trusts are too complicated and you just haven’t had time to learn and completely understand them, but you will get around to it one of these days.

Trusts have been around for centuries and there are tools that the rich use regularly to protect their assets. land trusts are a very special type of Trust that was created to protect your real estate investments, whether you are a landlord who holds real estate for the long term or a wholesaler flipper who only owns the property for 5 minutes.

There are several reasons why people use land trusts, but the most important one to me is the Privacy. No one knows what I currently own or what I have owned in the past and that is comforting to me to know that no one will ever be able to find all my assets if they get the bug to sue me for any frivolous reasons. 
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May 1, 2003 HUD imposed a 90 Day Title Seasoning requirement for all new FHA loans. This was their big idea to help protect the consumers from the Big Bad Flippers. It only took 6 years and a housing market crash to show the elitists the errors of their ways. Now they need our help to fix their mess.

They finally came to their senses and temporarily suspended title 24 CFR §203.37a(b)(2), which is the 90 Day Title Seasoning Requirement. This is only a temporary suspension. Starting February 1, 2010 and expiring on 1/31/2011, First time Home Buyers who apply for an FHA loan will not have the 90 Day Title Seasoning Requirement. However, we as investors will still need to follow a few guidelines in order to Resell (Flip) our Short Sales / REO’s and Flips to First Time Home Buyers who are applying for an FHA loan.
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Just a couple of weeks ago, I did a class on land trusts. This is one of those subjects that everyone wants to learn about, but most people never get around to using. There are all kinds of excuses as to why they haven’t done a Land Trust yet, but I think the biggest reason is that most people just think that it is too much trouble and that nothing will happen to them. That is until something actually does happen to them.

For example, just the other day, one of those students called and need some help. He needed to put his multi-family rental property into a land trust. He was a little frantic and had a sense of urgency about it. When we asked him what was going on, he proceeded to tell us a story that I have heard many times before.

Just a couple of days after the Land Trust Class, a tenant fell on the sidewalk. Now she wasn’t hurt at the time, but over the last week, she has been calling the landlord and complaining about her neck, she thinks she has whiplash. Having that feeling in the bottom of his gut, he decided to call his insurance agent and report the incident, just in case the tenant got worse and decided to make a claim. That is when the insurance agent kindly informed the landlord that he did not have an active insurance policy on the property. The policy lapsed over the holidays and the landlord had not realized this at the time. Money was not the issue, the holidays where. He had the cancellation
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