Do you spendtime doing things? If you do, it could be costing you money, big money. Think about wealthy people, do they stay wealthy by spending money? They make money by investing; preserving their capital and making it grow. When it comes to your most valuable currency, your time, are you a spender or an investor? Are your thoughts and actions in line with achieving your goals? Here are a few tips to change the way you leverage your time and talent that just might explode your results!
Examine the things you choose to do and ask, “are they moving me toward or away from my goals?” It’s easy to fool your self unless you are willing to be fully responsible for your results! This is where the rubber meets the road to success and a good reason to consider a coach or accountability partner to provide you objective feedback. So do like the wealthy and invest in yourself before you find yourself spent!
We have made huge strides in raising awareness on why Congress needs to de-couple seller financing from HR 4173, and why the Senate needs to de-couple it from S 3217. These bills are designed to protect individual consumers from big companies who are misleading the public. The current language endangers the very consumers it seeks to protect.
You can help enlighten Washington by calling, emailing and writing to your Senators and Congressional Representatives. If enough Americans raise their voices before these bills find a co-sponsor then it is possible that an amendment can correct a great injustice before it is voted into law.
I’ve received many questions asking, “Augie, I want to help but don’t know what to say!” Below you will find a letter template that you can copy and paste into an email, or download and modify, to send to your representatives. Please share this link with everyone you know so that they can use it as well. Together, we ARE making a difference!
I am very concerned about two pieces of legislation and a set of rules for implementing a law which will involve the possible loss of every American’s right to sell their own real estate without using a bank.
HR 4173 (Wall Street Reform and Consumer Protection Act)
Sponsor: Congressman Barney Frank (MA-4) introduced 12/02/09
Latest Action: Referred to Senate Committee on Banking, Housing and Urban Affairs
S3217 (Restoring American Financial Stability Act of 2010)
Sponsor: Senator Christopher Dodd (CT) Introduced 4/15/2010
Latest Action: Placed on Senate Legislative Calendar under General Orders, Calendar No. 349
If either of these two bills becomes law as currently written, a new Consumer Financial Protection Agency will be created. Among other things, it will incorporate new mortgage reform and anti-predatory lending regulations (previously introduced in HR 1728). Many of these are good ideas and necessary. But, what is not obvious in the title of either bill is the restriction of the very individuals and small businesses (including investors, home builders, and just Grandma and Grandma) it seeks to protect from financial disaster. These individuals and small businesses will be prohibited from offering to accept payments when they sell their own properties. In addition to helping sell properties and avoid foreclosure for many, seller notes are the only option for many homebuyers who can’t qualify to purchase a home using traditional financing. Seller financing is used in tens of thousands of sales every year between private individuals as it has since the early days of our country. These sales would essentially be eliminated because the homeowner would now be required to be licensed as a mortgage originator, and these licensing laws are very strenuous.
Why seller financing is needed:
These rules would prohibit even partial financing – i.e. a “seller second” – literally millions of transactions every year.
Bank loans are not available on some types of properties (millions of mobile homes, land, properties in disrepair, properties in flood plains, etc.)
The tight lending climate has made bank financing “out of reach” for many who are self-employed, small business owners, contract employees, and others. Most affected are the lower income, elderly and those trying to enter the market as first time homebuyers.
The federal tax incentive allowed first time home buyers to receive this credit for seller financed properties…but these initiatives would outlaw that credit.
There are hundreds of thousands of vacant homes. Seller financing is often the method builders and homeowners used to sell these houses.
Seller financing is an “age old” tradition based on private property rights.
According to HUD’s “Residential Financial Survey” in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear.
An estimated six million Americans own a property other than their own primary residence.
An estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties.
40% of non-owner occupied residences are mobile homes for which bank financing is unavailable.
Approximately 5% of homes in the US are for sale or lease…seller financing may be key to liquidating this inventory and bringing back the real estate market in many distressed areas.
Summary: We don’t believe seller notes should be any part of these regulations because they are not loans of funds. This is similar to when someone wants to sell a house. If they are selling their own house, they don’t need a license. But, it they want to sell someone else’s house for a fee, they will have to follow licensing laws. We think using your own equity should be the same way. We are not loaning money, we are selling our personal property and receiving payments in exchange for equity.
What we want: We would like to see “seller financed” transactions exempted from the bill so that Americans are free to sell their own properties.
The SAFE Act – Proposed rules for Implementation
The SAFE Act itself never mentions private homeowners at all. The legislation was clearly directed toward those in the business of providing loans for a living. But, the implementation of these rules will completely eliminate all seller financing for properties which are not owner occupied (including land, investment properties, inherited properties, etc.).
The SAFE Act was passed to prevent mortgage banking fraud, but is now set to require cumbersome licensing of several groups of government employees, non-profits, and private homeowners who Congress never intended to include.
After releasing their rules HUD posted them for comment on the site www.regulations.gov. The public comments total over 5100 with the vast majority addressing the inclusion of seller financing and non-profit housing assistance agencies.
Without question, HUD has acted independently and created a mess. Mortgage industry leaders themselves have commented in opposition to the rules as have Fannie Mae, Freddie Mac, and related industry associations across the country.
Again we’d like to see Seller Financing excluded altogether from the HUD rules as it was never intended to be a part of the SAFE Act.
Contact your state representative and ask to have seller financing de-coupled from the following bills: HR4173 and the ‘Restoring American Financial Stability Act of 2010’.
There is currently one bill in Congress and a companion bill in the Senate that threaten the very fabric of American property rights. While there are many good benefits for the public included in these bills there are dangerous pitfalls as relates to the consumers this bill is intended to protect. Real estate investors nationwide are seeking assistance in de-coupling the individual taxpayer from this legislation that is intended for oversight of institutions, and we need your help to get the word out.
Don’t Judge A Book (Or A Bill) By Its Cover
The bills are HR 4173, the Wall Street Reform and Consumer Protection Act, and the Senate companion bill, the Restoring American Financial Stability Act of 2010. These sound great don’t they? Wall Street Reform, Consumer Protection and American Financial Stability are warm and fuzzy sounding names. You’ve probably heard the old adage, “you can’t tell a book by its cover,” right? Well, you can’t tell a piece of legislation by its name either. Both bills literally contain thousands of pages.
I had the opportunity to participate in National REIA’s 3rd Day On the Hill in Washington, D.C., where these bills were brought to my attention. This important event was sponsored by the National Real Estate Investors Association, who represents over 40,000 small businesses in 41 states. Of concern to both investors and average Americans is that we are all caught in one big net directed at mortgage regulation. You, me, your parents, your grandparents…everyone you know would, upon passage of this legislation, be required to become licensed mortgage lenders if we decide to sell any property we own with owner financing. Suddenly, if your parents own a property free and clear and decide to let you buy it from them with monthly payments, they would need to be licensed as a mortgage lender and you would have to qualify for the loan as you would with any other lender.
Many properties, such as condos, mobile homes or land, don’t qualify for bank financing but would now have to. Why? Because purchasing from individuals by using a privately held note would no longer be legal. After the tumultuous real estate market of the past few years, many of today’s buyers can’t qualify for a traditional mortgage and count on seller financing. This would no longer be an option for millions of potential homeowners.
Threats To Private Property Rights
HR 4123 poses the following threats to the security of private property rights, and to the stabilization of the housing markets in many communities:
On its face, this legislation appears to merge individual taxpayers who accept installment payments for their equity with banking institutions, mortgage brokers and originators who sell money for a business.
When a seller offers to sell their own property to another and accept payment for equity, there is no loan, but rather terms of a sale.
Banks lend money that the borrower can then spend as they see fit.
In the current market, if there were no seller financing, there may be no financing at all in many communities.
Millions of soon-to-be-retirees who have worked a lifetime and prepared for retirement by investing in properties that can be sold in exchange for installment payments providing supplementary income will be negatively impacted by this legislation. The legislation limits individuals to only one transaction every 36 month. Imagine trying to liquidate a large portfolio at this pace.
The dramatically increased number of individuals and families who are going through foreclosure may only retain the ability to buy a future home for their family by finding a seller amenable to accepting an installment sale
A homeowner who may have sold their previous home with seller terms has now lost their job and is about to fall behind on payments. However, they have a little vacation cabin. In order to sell quickly, the cabin has to be sold on terms to provide enough income to keep the homeowner current on their present homestead. This scenario would run afoul of this legislation as it is currently written.
While this legislation regulates large organizations with teams of legal people (consider the contract language that is being used in the resale of foreclosed homes being sold by banks) it puts the individual taxpayer at a tremendous disadvantage on both the selling side as well as the buying side, thereby making homes less accessible to many people.
Lastly, many people in the United States live in manufactured housing for which there are basically no loan products available. Once the manufactured home reaches a certain age, although there is still remaining useful life in the home, no loans are available for homeowners. How will these properties be bought or sold if not with a seller accepting installment payments?
Specifically, the language lifted from failed HB 1728 and added to these bills, the former, Section 101, 3, (E) does not include, with respect to a residential mortgage loan, a person, estate or trust that provides mortgage financing for the sale of 1 property in any 36 month period, provided that such loan:
(i) Is fully amortizing
(ii) Is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay
(iii) Has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and life-time limitations on interest rate increases, and meets any other criteria the Federal banking agencies may subscribe
Contact your state representative and ask to have seller financing de-coupled from the following bills: HR4173 and the ‘Restoring American Financial Stability Act of 2010’.
I invite you to follow up with your Senators (before the Senate bill is voted upon) and Congressmen (regarding an amendment should it pass the Senate) with emails, phone calls, letters and personal appointments when they’re back in our home states. The bill, as written, has already passed the House and will soon be voted on by the Senate. We need your support and the support of every property owner you know.
What did we ask for? The answer: “to have seller financing de-coupled from these bills.”
Surprise! Your Legislators WANT To Hear From You!
You may be surprised to learn how accessible and interested many of our legislators in hearing from their constituents. Did you know that, with an appointment, you can see almost any of your local House Representatives or Senators? Possibly more difficult in Washington, D.C. than while they are at home in your state but, even then, if they don’t have the time to speak with your personally, you can make appointments to meet with their aides.
Everyone we talked with about these bills seemed genuinely concerned and a bit alarmed at the harm this one section could do to the general public. They were concerned for the “Mom and Pop” operations out there who may have paid off some rental properties for their retirement and now, with the new laws, would no longer be able to sell with owner finance securing themselves income during retirement. The general consensus was that this could not have been the original intention of this bill. Most termed the situation an “unintended consequence”.
I’d like to close with a quote from my friend Tom Zeeb, president of Capitol Area REIA, “Never ask how law and sausage are made.” Unfortunately, we need to know what’s in the laws are legislators are voting on. The good news is that we can influence the outcome with our voices and our votes.
Your Call To Action – Make A Difference!
You can locate contact information for your Senator at http://www.Senate.gov and you can find your Congressional Representative at http://house.gov. Remember, we are asking them “to have seller financing de-coupled from the following bills: “HR4173 and the Restoring American Financial Stability Act of 2010.” Contact them today!
In closing, I thank National REIA for their legislative efforts on behalf of our industry. I also thank Central Florida Realty Investors Associationfor sponsoring Charles Fischer, CFRI President, and myself to represent Central Florida. Finally, I thank the 40-plus investors in attendance and their home REIAs for sending them. We were in Washington, D.C. working with our elected legislators in both the House and Senate to protect American property rights, and now we need your help. Take action today!
What does King Solomon have to do with real estate investing? Not much or maybe everything. In his day he owned the biggest house on the block. He was also the biggest commercial builder/developer in his market. He had a crew of over 180,000; 30,000 laborers, 70,000 bearers, 80,000 quarrymen and 3,600 construction supervisors. His work on the first temple in Jerusalem was reportedly a sight to behold. You can read about it in 1Kings Chapters 5-8. It’s impressive. Besides being Trump-like in his real estate development Solomon was a prolific writer and composer. Moreover he was known for his great wealth and wisdom.
While reviewing a video clip from a recent PACT coaching workshop I saw the opening quote. It was attributed to him; “Whoever loves instruction, loves knowledge, but he who hates correction is stupid.” This quote appears in the Book of Proverbs among a great collection of other wisdom. What really strikes me about this quote is that it is painfully blunt and it also challenges the status quo. Many would be real estate investors don’t think they need learn anything else. They fail to recognize the fact that specialized knowledge can make a huge difference in their profitability.
Now according to Solomon himself, instruction creates knowledge and using that knowledge is what made him the wealthiest monarch of his time. That wisdom and insight worked for him 3000 years ago and it can work for you today! Superior results are based in the right application of specialized knowledge. Getting objective feedback is what answers the questions, “Am I getting the right knowledge and, Am I using it effectively?” Correction is critical to making the most of one’s learning. Where do you go for feedback? Who holds you accountable? Solomon had Proverbs, Wisdom, and Smarts. He also had a great variety of advisors available to him. If he could handle feedback, I guess I can too…how about you?
Competition among giants can be a fierce thing. Those of you who know my background know I spent 22 years in the banking industry, specifically, the credit card business. Until our division was sold, I worked for Citibank and worked my way up to Vice President of National Sales where I dealt with some of our largest clients and prospects. Back then Citibank was the largest issuer of Visa and MasterCards in the world. One of their great coups was the co-branded American-Advantage Card with American Airlines. This was certainly a marriage of giants.
Back then Citibank, Visa and MasterCard had an arch rival; American Express. It was almost taboo to mention that nefarious name inside our corporate walls. They were perceived as classy, expensive and upscale while bankcards like Visa and MasterCard were pedestrian. The co–brand with American Airlines would add a level of prestige for the travelling executive to collect air miles for free travel as they spent using the card.
That was all 15 to 20 years ago. So, what is this history lesson all about? Just this. I opened my mail this morning and found a solicitation from Citibank’s credit card business inviting me to sign up for a no-fee American Express card with American Airlines mileage awards attached. Wow, the difference time can make. Arch rivals now bosom buddies. I know some late industry execs that are likely rolling over in their graves. So what’s my point?
Just like the big guys, we small business owners need to adapt; to embrace new ideas. Both Amex and Citicards are under pressure in this economy. They can join forces and survive or falter. American Airlines, getting clobbered by the highest costs in the industry, hope their loyalty programs will keep people flying them. Me, I’m looking for ways to increase my effectiveness rather than working 18 hours a day. I want to focus on the business activities I enjoy and that result in making money instead of the mundane time wasters that rob my precious minutes and hours.
Twenty years ago, I would never have anticipated an alliance between Citibank Visa/MasterCard and American Express and yet here we are. We too have to look forward to new possibilities in our businesses; new models. One thing I’m investing in for my future is tools and ideas to maximize my effectiveness. You should too!
We can be busy or productive. Profits come from productivity and effectiveness. What new methods, tools or techniques have you found that are helping you be more effective? I’d love to hear your thoughts.