DOS CLAUSE - Posted by Brad

Real Estate Investing Real Estate Law
1

Posted by JohnBoy on April 10, 1999 at 23:57:58:

If a local office does cover Fort Meyers then you might want to contact the CBBB because they’re still showing no BBB in that area, at least not one that is authorized to use the BBB logol and their torch simbol.

What city is the Orange County property in?

Heres what shows up on the property at 9906 Anzac Ave:

Sold in Oct. 96 for $50,000

Sold in Dec. 98 for $51,000

If thats what meets Nationwides buying criteria then I can’t understand why people presenting deals at 40% of FMV would be getting rejected as not meeting their criteria?? Can you?

2

DOS CLAUSE - Posted by Brad

Posted by Brad on April 09, 1999 at 18:50:24:

I would really have to question the intelligence of anyone who considers themself to be professional when they blatanly violate the DOS clause. It is beyond shameful. It is downright stupid.

3

Another scenario… - Posted by Rob FL

Posted by Rob FL on April 11, 1999 at 14:22:15:

Most mortgages also have a clause on “waste”. It says the mortgagor shall not allow any waste on the property meaning he won’t let the property get run down. So if someone can’t afford to put on a new roof or new carpet or repaint or fix termite activity, then I guess they would be considered “deceiving and lying and dishonest” because they intentionally let the property get run down. Lets throw them in jail. What if I buy the property and violate the due on sale clause and then fix the property up? Now the ledner has better collateral as security for its loan.

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The Ballyhooed DOS CLAUSE. OOOooohhh. - Posted by Ben (IN)

Posted by Ben (IN) on April 10, 1999 at 22:22:50:

Brad,

You obviously haven’t done this before. Part of assuming “subject to” is NOT contacting the lender. Just make them the payments and keep the property insured and they (the lender) don’t know and don’t care. They got their interest, they’re making a profit, they’re happy.

Whether its “moral” or not, Geez, who cares! Money talks. I got about 35 loans I am making payments on that are in other peoples’ names. I make the payments with my company check on all of em. If it was a problem, you know, I think I would have heard something by now. THe reality is that on the first week of each month, every bank processes tens of thousands of loan payments, of which yours is just one, or two. All they want to see is the dollar amounts match up, and a loan number to credit the account. As long as the $5 an hour batch girl has that, she don’t care! The payment status turns up as “current” on a report along with about 20,000 other loans. If you think someone is going to go fussing over one little loan payment being made with someone else’s check, you play with yourself too much.

All this BS about a challenge to Jim is yesterday’s lunch. You just go ahead and do it (take over a loan “subject to”) because you know what their (a lender’s) interests are, and that despite what fuss a bank may make, you are actually serving them by making their payments and saving another house going back to their books. note: if you have ever challenged a bank on this when you have been making the payments on time, you will know that they back down and take your payments. See, THEY KNOW what the best situation is. They want those payments, no matter who they come from.

What you are mindlessly bleating about as being “immoral” is actually, quite moral. The bank gets their money, the seller keeps good credit, a buyer gets to lease purchase a home or something, and the investor makes a profit. Everybody wins!

Wow. Real immoral.

Try commenting on something you actually “know” about Brad instead of stinking up the place with your righteous indignation. You’re ignorant and a sorry sight.

Ben Innes-Ker

5

Re: DOS CLAUSE - Posted by Vickie

Posted by Vickie on April 10, 1999 at 20:04:03:

The nice thing about working for a reputable company like Nationwide Real Estate is that they don’t get into these dishonest things that others who sell on this site are preaching.

6

Are you now or have you ever been a member of the Communist party? - Posted by Craig_NOLA

Posted by Craig_NOLA on April 10, 1999 at 18:34:42:

Brad,

Your reasoning is circular; your arguments are rife with fallacies; and your ad hominem attacks in response to well-considered and intelligent posts by respected members of this community is the only thing that is “pathetic” and “shameful” here.

You seem to be filled with moral outrage on behalf of a “victim” (i.e. the lender) that you have failed to prove has suffered any ill effects. The lender has had its loan paid on time and has avoided the possibility of having to foreclose on a default.

I suggest that you take your sanctimonious ravings, run to the nearest street corner, and begin warning the community of the imminent collapse of the banking system due to rampant violations of the DOS clause. Perhaps then, the rest of us can go back to discussing creative (and honest) real estate investing.

Respectfully yours,

Craig

7

Enough! What about making money? - Posted by Jim IL

Posted by Jim IL on April 10, 1999 at 16:37:10:

Brad,
This is not meant as a “slam”, but while you were wasting time writing inflamatory posts here and instigating a converstaion that has been discussed here more than I care to recall, what did you do to make money? Did you make any calls, look at any properties or sign any deals?
I did see these posts and wanted to respond, but frankly I did not have time to.
Over the last day I have talked to at least 15 sellers, set 4 appointments to meet sellers and discuss ways to buy there homes, and made 6 offers for Wholesale “flips”.
Now, (Whew!) I am home with my family for quality time, and while my wife prepares dinner, I am online “surfing” to relax.
After dinner I will sit down with Todays Classified ads and find more buyers.
And of course answer the phone everytime someone calls from our own classified ad to attract “sellers”, and “buyers”.
Then, after all that, I may read some books and courses (or re-read them) to get a better handle on the “options” I will discuss in my meetings with sellers.
So, rather than worry about what someone else is doing in thier business, I’ll continue to run my own.

Perhaps you should do the same.

If you feel that violating the D.O.S. is a problem for you, DO NOT DO IT!!
Leave those deals that are “subject to” for those who are not opposed to “violating” the D.O.S.

The bottom line is, do what you want! That is the best thing about this business, you run it, you make the decisions, and you make the rules for yourself.
You are the boss of yourself.

So, having said that, good bye, good luck and let us know anything else you have questions about, but quit trying to incite the board into a debate that is old and worn out.

Have a nice day,
Õ¿Õ
Jim IL

8

Some People Like to be poor!!! - Posted by Dirk Roach

Posted by Dirk Roach on April 10, 1999 at 15:55:27:

Hi Brad,
I think that you have found your way onto the wrong site. This is CREATIVE Real Estate Online. It seems that you have been led here by mistake. You must be looking for CONVENTIAL Real Estate Online.
Good luck, and I hope that you find it,
Dirk

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Re: DOS CLAUSE - Posted by Brad

Posted by Brad on April 10, 1999 at 14:54:57:

I presented a challenge to Jim. I challenged him to provide me with his account number and the name of his financial institution. I was going to call his financial institution and ask them if they see it the same way that Jim does. Jim declined this challenge. When it came time to walk the walk, he ran away. Amazing how when the light of truth is turned on, those who participate in dishonest practices scurry away like roaches in the night.

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I think it’s obvious now . . . - Posted by Joe Kaiser

Posted by Joe Kaiser on April 10, 1999 at 14:00:13:

Brad is just goofing around here. Admittedly, I bit, but further discussion seems like a waste of time.

Joe

11

SHOW ME THE EVIDENCE - Posted by JPiper

Posted by JPiper on April 10, 1999 at 13:02:15:

I’ve read each of your posts. Here are some of the words and phrases you have used: “I question the intelligence”, “beyond shameful”, “stupid”, “dishonest business tactics”, “extremely shameful”, “sleazey”, “disingenuous tactics”, “dishonest”, “lying”, “dishonestly sneak around”, “practice unethical tactics”.

Whew! You’ve been a busy boy, haven’t you?

One thing I think we can all agree on is that ALL of your words and phrases are emotional. No where in any of your posts do I see mention of a single fact. Here’s how my dictionary defines a fact as it pertains to law: “The aspect of a case at law comprising events determined by evidence as distinguished from interpretation of law.” Here’s another definition of fact from my dictionary: “Something that has been objectively verified”.

Notice that these definitions of “fact” contain words like “evidence” and “objectively verified”.

Your words and phrases are conclusions. They are your interpretation. Presumably you didn’t draw these conclusions lightly. Presumably underlying your conclusions and interpretations you have “facts”. Presumably you have found “evidence” that reveals that transferring a property without paying the loan off in full is “dishonest”. What is your evidence? What facts do you have that support your conclusions?

Here is a “due on sale clause”?..“17. Transfer of the Property or a Beneficial Interest in Borrower. If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person) without Lender’s prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Security Instrument.”

Here’s what I get from this clause. First, the clause does not prohibit me from selling or transferring my property. As a matter of fact, I don’t need the lender’s prior written consent to do so. However, in the absence of this written consent, the lender MAY, AT ITS OPTION, accelerate the loan. So far so good?.it’s quite clear. This clause tells me what I can do, and what the lender can do if it chooses. The last sentence then describes what the lender CAN’T do. The lender cannot exercise it’s rights under this clause if this exercise is prohibited by federal law.

So here’s an example. I transfer a property without the lender’s written consent. So far so good. Nothing in this clause prohibits that. Now the lender notices that this transfer has taken place and decides to do nothing. What about this is “dishonest”? What about this is a “dishonest business tactic”? What about this is “shameful”?

Here’s another example. I transfer a property without the lender’s written consent. Same as above, nothing prohibits that. Now the lender notices that this transfer has taken place, and this time decides to call their loan due and payable?.after all, it’s their option under this clause. Now I pay them the money. Perhaps I have the cash, or perhaps I refinance the property. What about this is “dishonest”?

Notice that nothing in the above clause requires me to have “permission” from the lender to transfer a property. Nothing in the above clause requires me to “notify” the lender about a transfer. Nothing in the above clause prohibits a transfer.

So help me out here. On what factual evidence did you base your conclusions that transferring a property encumbered by a loan is “dishonest”, “shameful”, “stupid”, “sleazey”, or “lying”?

SHOW ME THE EVIDENCE.

JPiper

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SHOW ME THE EVIDENCE - Posted by JPiper

Posted by JPiper on April 10, 1999 at 12:59:16:

I’ve read each of your posts. Here are some of the words and phrases you have used: “I question the intelligence”, “beyond shameful”, “stupid”, “dishonest business tactics”, “extremely shameful”, “sleazey”, “disingenuous tactics”, “dishonest”, “lying”, “dishonestly sneak around”, “practice unethical tactics”.

Whew! You’ve been a busy boy, haven’t you?

One thing I think we can all agree on is that ALL of your words and phrases are emotional. No where in any of your posts do I see mention of a single fact. Here’s how my dictionary defines a fact as it pertains to law: “The aspect of a case at law comprising events determined by evidence as distinguished from interpretation of law.” Here’s another definition of fact from my dictionary: “Something that has been objectively verified”.

Notice that these definitions of “fact” contain words like “evidence” and “objectively verified”.

Your words and phrases are conclusions. They are your interpretation. Presumably you didn’t draw these conclusions lightly. Presumably underlying your conclusions and interpretations you have “facts”. Presumably you have found “evidence” that reveals that transferring a property without paying the loan off in full is “dishonest”. What is your evidence? What facts do you have that support your conclusions?

Here is a “due on sale clause”?..“17. Transfer of the Property or a Beneficial Interest in Borrower. If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person) without Lender’s prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Security Instrument.”

Here’s what I get from this clause. First, the clause does not prohibit me from selling or transferring my property. As a matter of fact, I don’t need the lender’s prior written consent to do so. However, in the absence of this written consent, the lender MAY, AT ITS OPTION, accelerate the loan. So far so good?.it’s quite clear. This clause tells me what I can do, and what the lender can do if it chooses. The last sentence then describes what the lender CAN’T do. The lender cannot exercise it’s rights under this clause if this exercise is prohibited by federal law.

So here’s an example. I transfer a property without the lender’s written consent. So far so good. Nothing in this clause prohibits that. Now the lender notices that this transfer has taken place and decides to do nothing. What about this is “dishonest”? What about this is a “dishonest business tactic”? What about this is “shameful”?

Here’s another example. I transfer a property without the lender’s written consent. Same as above, nothing prohibits that. Now the lender notices that this transfer has taken place, and this time decides to call their loan due and payable?.after all, it’s their option under this clause. Now I pay them the money. Perhaps I have the cash, or perhaps I refinance the property. What about this is “dishonest”?

Notice that nothing in the above clause requires me to have “permission” from the lender to transfer a property. Nothing in the above clause requires me to “notify” the lender about a transfer. Nothing in the above clause prohibits a transfer.

So help me out here. On what factual evidence did you base your conclusions that transferring a property encumbered by a loan is “dishonest”, “shameful”, “stupid”, “sleazey”, or “lying”?

SHOW ME THE EVIDENCE.

JPiper

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So, what is your definition of “successful”(monetary)? - Posted by FJW

Posted by FJW on April 10, 1999 at 11:53:28:

It’s always funny how the people who point their finger don’t notice the feet, knees, or entire legs they happen to be swallowing.(I do it all the time; probably will right here) Everyone reading either is or knows the most successful person(monetarily) they happen to know at the time(right now). But the ones that know they don’t know everything or everyone, know there are many other people in the world that make “those successful people” seem like paupers(monetarily) in comparison. Same thing applies with judgement, ethics, character, information, education, learned perceptions, habits, everything …life. It’s the age-old parable: Judge not, lest ye be judged.

This is ridiculous. RE acquisition has gone on this way forever and will continue to do so with or without you, me, everyone who’s ever seen any guru, visited every website, seen every infommercial, studied every book, earned every degree, interpreted every law, attended every seminar, etc…OR NOT! And it will never become illegal. Why? It’s viable. Period.

If you don’t like it, don’t do it. Save up your money and only buy all cash and don’t take tax deductions because the gov’t needs the money, and don’t buy on margin because it’s not your money, and don’t drive over the speed limit because its against the law.

Q: Garn-St. Germain(?) was created to protect the borrowers from the unscrupulous acts of the lenders, NO?

FJW

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Re: DOS CLAUSE - Posted by David Alexander

Posted by David Alexander on April 10, 1999 at 10:30:00:

Brad,

Can you make any other argument, besides one from emotion. I’ll be honest if you run your Investing career based on emotion, it will probably be short lived, at the very least the growth of it tremendously stifled.

Simply put, we solve problems. The people I get houses from would have left anyway, the bank would have gotten a house back at a cost of thousands. The banks are not in the business of selling houses and it cost them money to get them back. The banks are in the Income stream business, that is what they do, and want to continue to do recieve these payments, they don’t care about the house or the payor, it is about Money and profit, nothing else.

David Alexander

15

Thats why we have law makers,and the law makers haven’t deemed it a crime to buy property subject to a loan with a DOS - Posted by Dave(MI)

Posted by Dave(MI) on April 10, 1999 at 06:48:52:

ASK YOUR LAWYER.

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Brad, ever pay a payment on the 2nd instead of the 1st of the month? - Posted by Rick Vesole

Posted by Rick Vesole on April 10, 1999 at 03:55:12:

If so, then you have committed an unethical act by breaching your contract with the lender. You see even though there is no late charge until the 15th of the month on most mortgages, the loan payments are nevertheless ususally due on the 1st, and paying them even one day late is in violation of your note which provides that payments are to be made on or before the 1st day of each month.

On the other hand, no where is there a provision in the standard Fannie Mae mortgage which says that you may not sell the property without paying off the lender. It only says that if you do, the lender may at its option choose to call the loan due.

So whose is unethical, the person who might pay a payment a day or two late in breach of the note or the person who sells the property without paying off the loan? I think that what you are calling unethical and dishonest is based upon a certain segment here who perpetuates the false statement that it is a breach of contract to sell with out paying off the loan. People can say it as many times as they want, but it does not make it true.

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Re: DOS CLAUSE - Posted by spanno

Posted by spanno on April 10, 1999 at 01:49:54:

always sp00f your DOS!
spanno

18

Never mind the DOS… Why pay all cash? - Posted by Brandi_TX

Posted by Brandi_TX on April 10, 1999 at 01:29:52:

Brad-

You have definetly made up your mind, that no matter what anyone responds regarding the DOS issue not being “dishonest”, you will maintain that it is. So I won’t even touch that point. You see it how you want to while others will see it as a way to help the seller out of a bad situation and a way to get a deal done quickly.

BUT, regarding a comment you made in response to Joe Kaiser:

“If you are successful at what you are doing, then you should have plenty of money to buy real estate.”

If you do the math, people are more successful when they use LESS of their own money, NOT ALL OF IT.

Example- 2 people each have 100k to invest in RE. Person A spends his entire 100k on 1 house, that in 6 months he can sell for 125k. He has made 25k profit in 6 months.

Person B decides to take his 100k and put 10k down on 10 houses, all of which he can sell for 125k in 6 months. He has made 250k profit in 6 months by NOT paying cash for each of the houses.

Who is more successful? Moneywise I say person B.

You also said: “Everyone I know does it the right way because they have the money for it.” As you see in the example, both people had the money. Person B used his money more wisely, and made a WHOLE lot more money.

Food for thought, don’t be so traditional, you (and the people you know) will make a lot more money.

Brandi_TX

19

I’m a stupid guy - Posted by Joe(IN)

Posted by Joe(IN) on April 10, 1999 at 24:25:32:

I just closed a deal, and I violated the dreaded DOS. The mortgage is $87K, and I gave the sellers $13K which I pulled off of a credit card for 3.9%.

I had 2 weeks to pull this off. If I had waited 3 more days this property would have been in the foreclosure process. Do you suppose I could have gotten a mortgage in 2 weeks with a 13% down payment?

I covered all my bases; I have disclosures, limited power of atty., title ins, etc, etc. I also have an exit plan… No, I have 3 exit plans if they call the mortgage due. I also have a L/O tenant buyer who is going to give me $5000 down, and net cash flow of $400 per month with a purchase price of $128,000.

But, you’re right I’m stupid and I should have walked away.

Deep regrets
Joe

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Re: DOS CLAUSE - Posted by Brad Crouch

Posted by Brad Crouch on April 09, 1999 at 21:31:55:

Brad,

I am posting a response mainly to make the distinction between our names. I would hate to think that someone might mistake us.

Your posting shows a definite lack of education, and to post it shows that you are either too impatient or lazy to go through the necessary steps to learn better than you have.

Your assignment is to start reading and learning. You will, no doubt oneday realize just how stupid your posting really is.

No big deal if you are just excited and impatient. But a VERY BIG deal if you are just too lazy to learn before committing your thoughts to writing for all to see.

Do better. Study!

Meant to help,

Brad Crouch