CFD and the DOS. ??? - Posted by Lazaro

Posted by Lazaro on July 25, 2001 at 21:47:27:

Hi Terry,
Do you find this much better? I have gotten some info on how to set one up but I still have one question: Can I still name myself trustee? Thanks for your help.

CFD and the DOS. ??? - Posted by Lazaro

Posted by Lazaro on July 25, 2001 at 19:00:37:

Does the contract for deed,when recorded, trigger the DOS clause? Because I was thinking about going this route on some subject to candidates. I would just mirror their loan and I will not get in the mess that subject tos can get you in. Please Help. Let me know what you guys think.

Yes, Yes, and Yes. - Posted by Bud Branstetter

Posted by Bud Branstetter on July 25, 2001 at 20:56:45:

The contract for deed violates the DOS when it is signed. It puts it on public notice when it is recorded. Some people don’t care. You just hope your lender doesn’t even if they find out.

I continue to be amazed at investors continuing to do things(CFD, L/O, 100% transfer of landtrust interest) when there is a better method. Is it because they don’t believe it works? Do they think it too expensive? Are they not asute enough to do it themselves? Are them saying to themselves something I already know works for me so why change?

The laws in Texas take effect shortly that CFD have to be recorded. Do others want to wait until the lenders start calling due all the hide the elephant approaches. I’m willing to defend in court my approach. Their approach is going to be difficult if they have to do something.

Re: CFD and the DOS. ??? - Posted by derekAL

Posted by derekAL on July 25, 2001 at 19:55:54:

When I first started this business about a year ago - all I did was sell on a CFD & I had them recorded at that. I still do CFD & I believe that that is the way to go but I DO NOT RECORD THEM when I sell. When you record this CFD - it can trigger the DOS - to my knowledge. The question is this - How many lenders are going to call the note due b/c of a CFD or a subject to deal- the answer is not many. When I buy on a CFD - I record , when I sell on a CFD - I dont. I would do the subject to & use the land trust method. I would by all means get the deed if possible.

Re: CFD and the DOS. ??? - Posted by Matt_IL

Posted by Matt_IL on July 25, 2001 at 19:11:17:


I have been thinking the same thing. Normally, yes they trigger DOS because it’s a transfer of ‘equitable title’, HOWEVER…

Supposedly with a VA loan it does NOT. Stacy from AZ recently posted a reference to the VA lending regulations that specifically describe a CFD sale and specifically say that it is allowed, does NOT trigger DOS, and does not require VA approval.

What I’ve been digging around for is war stories of people who have actually done this to see if they encountered any lender resistance. I would think that they would have to follow the VA rules.

Imagine the scenario if you did this and they called it anyway, and ended up in foreclosure, thus hurting the seller’s credit. I don’t think VA would be very happy about a Vet’s credit being ruined by a lender’s refusal to follow the rules. And if you ended up in court you could always agrue that you only did the transaction because you KNEW that the VA rules specifically allowed it.

Right now, this method is looking good to me; any other thoughts?

I agree… with one exception - Posted by BR

Posted by BR on July 26, 2001 at 15:08:02:

Selling on CFD does not violate the DOS with VA loans.

Re: Yes, Yes, and Yes. - Posted by Matt_IL

Posted by Matt_IL on July 25, 2001 at 21:46:37:

I agree that the PacTrust sounds great (I assume that’s what you’re referring to) and I appreciate the effort that’s gone into it as well as the time invested to teach us about it. I would also agree that doing any kind of transaction within a PT is better than doing the same transaction without it.

I think the concern for many is that it won’t stop the lender from attempting acceleration. Then what? I know I don’t have the money to fight a court battle, although I would be very interested to see the result.
It doesn’t seem like anyone else has fought that fight to date (either that or no PT transaction has ever been accelerated).

I think what would win many people over is if they knew that lenders would back off when confronted with the fact that the seller retains a 10% interest.

I know the PT provides many other protections, but acceleration is main risk that many people (esp. newbies like me) fear.

Just stating a point of view, no flames, no foul.

Re: Yes, Yes, and Yes. - Posted by Lazaro

Posted by Lazaro on July 25, 2001 at 21:12:27:

What is it that you think is the best way to buy? I couldn’t tell what you think is the best option.

Re: CFD and the DOS. ??? - Posted by Lazaro

Posted by Lazaro on July 25, 2001 at 21:15:25:

Yeah, I think the CFD would only be good to use on a VA loan. I think Matt has a good point in his post.

The better mousetrap - Posted by Bud Branstetter

Posted by Bud Branstetter on July 26, 2001 at 11:00:28:

There is reason to be concerned. There are always risk in business. But you can not let that control you. Several posts Bill has made say it best. Since he is the godfather of the approach I just stay in the background and let him eloquently respond.

I think I know the individual that started the rumors and how that individual works. Inuendo, rumor and backstabbing are selfserving to the person.

Re: Yes, Yes, and Yes. - Posted by Terry (Houston)

Posted by Terry (Houston) on July 25, 2001 at 21:19:41:

PAC TRUST. I am beginning to believe him!