Re: countrywide - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 11, 2002 at 19:49:37:
If you’ll look through the threads I posted, Bill Gatten speaks of going to court over a subject-to against Countrywide. He won, but that’s him, that judge, at that time. No guarantee it would be the same for every other circumstance. Also, how many of us could afford the time and money it would take to defend ourselves. Better to never get there in the first place.
Re: Yep - Posted by JohnBoy
Posted by JohnBoy on July 12, 2002 at 24:42:14:
“Garn St. Germain provides exclusion to the DOS clause when there is ??a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property?.”
The transfer to a land trust does NOT relate to a transfer of rights of occupancy. The seller deeds to the trust at which time the seller is named as the only beneficiary and at which time the seller is still the occupant. So NO relation to a transfer of occupancy rights at the time of the transfer into a trust.
Then AFTER all that is done, THEN the seller assigns part of the beneficial interest to a another party where the seller still remains “A” beneficiary. Then the other beneficiary LEASES the property under a triple net lease which does NOT violate the DOSC as long as the lease is for LESS than 3 years and does not contain an option to buy. So no DOSC violation.
The PACTrust does not give any option to buy. The PACTrust only gives the tenant a “first right of refusal” to buy the property at the end of the lease. A first right of refusal is not an option to buy and there is nothing that says a giving a first right of refusal violates the DOSC!
Garn St. Germain provides exclusion of any lease that is for less than 3 years that does not contain an option to buy.
You are not transfering any bulk of burdens and benefits pertaining to a delayed sale. Taxes and burdens and benefits are transferred by using a triple net lease. That’s it! Under a triple net lease the tenant pays all taxes, repairs, etc., and any RENT paid is NET RENT to the landlord, which is the trust. When you pay property taxes under a triple net lease the tenant gets the tax deduction since they are obligated to pay it and they are the one paying it under a triple net lease.
When I leased space in commercial buildinds under a triple net lease I paid for taxes, I had the burden of ownership as far as being responsible to pay for repairs and maintainance, but I never had any rights to owning the property or any options to buy the property or any delayed sale that could take place later. I was just a tenant and that’s it! But I got to deduct the taxes since I was the one paying them under a triple net lease. So why would this be any different under a triple net lease pertaining to leasing a house vs. a commercial building under a triple net lease??? There is no difference!
You do not need a LLC. You only need two or more unrelated parties as beneficiaries of the trust. Then the trust cannot be partitioned. The one party being sued could have their part of the trust attached to where when the property owned by the trust is eventually sold that party’s share would go to any creditor that attached their share. But they cannot force the innocent party to liquidate their share of the property just because of something the other party is liable for. They have to wait until the property is sold in order to get any of the one party’s share.
Complex? I won’t argue on that one. It does sound and seem complex. But I think once someone gets it all it won’t sound or seem complex at all. Now my personal opinion as to why it all seems and sounds complex is because Gatten is so dang intelligent and must possess an extremely high IQ that no matter how simple he tries to simplify it, his explanations are still going over most of our heads! In other words, he is just so smart he can’t explain it in any more simplified terms that are more to our level of thinking where we can easily get it and understand it all in layman terms! But that is just my opinion. Maybe someday I will completely get it all myself! LOL
Expense? Yeah, it sounds like it will be a lot more expensive to set it up, but then if you learn it all and get it all, you can set up your own without all the extra expense.
Never had a problem? I wouldn’t know. They claimed to have done thousands of these over the years so that has to say something good about it. Surely if there was a problem we would have heard something or at least their would be some cases to reference pertaining to these. The question is, how many years and how many deals does one need to do before we can consider it must be pretty safe to use? What if in 10 years from now and 5000 deals later using a PACTrust there still isn’t any case law to reference on this? Do we just say forget about it for as long as it takes until some problem does occur? Could there be such a thing that there is no problem to where it will be unlikely we would ever hear about any problem? What exactly does it take before considering something must be pretty safe to use?
Just my independant opinion based on what little about it that I know.
Re: countrywide - Posted by JohnBoy
Posted by JohnBoy on July 11, 2002 at 20:35:10:
I looked through the threads and did not see anything about Gatten going to court over a loan called by countrywide. But most of the links don’t come up. The only thing I seen of Gatten’s was a post about a letter that B of A sent to someone which Gatten responded to.
I didn’t say spend the time and money to defend yourself. I said to at least wait until the lender actually files suit and you are served with a summons. Then refinance if you don’t want to defend it. It takes NO time or money to ignore the lender. It takes no time or money if they actually file suit and serve you with a summons other than the time and money to refinance the property. If they file suit and serve a summons to foreclose you don’t even have to respond! Ignore it and pay the loan off by refinancing. The lawsuit to foreclose is dismissed by the lender once they are paid off! But why jump the gun by just assuming they will pursue it and not just wait until they actually do it, THEN if they actually file suit then refinance at that time? That costs you nothing to just wait it out by forcing the lender to follow through with their threat of foreclosing other than the attorney fee to file the suit and court cost of filing the papers. A small price to pay to wait it out to see if you even have to refi or not!
Re: Yep - Posted by Jimbob
Posted by Jimbob on July 12, 2002 at 10:38:20:
Seems we agree on several points…complexity and expense. I’m willing to agreee to disagree on the balance.
The DOS and tax flaws are points brought up by attornies more knowledgeable than me and I believe more knowledgeable than Mr. Gatten, so I don’t have anything to add.
I think the important point is that the product isn’t as snow white pure as it is presented by it’s sales people…like most products.
Regards,
Jimbob
P.S. I really liked your advice to that guy to have his LLC renamed as the defendant in a law suit…you da man JohnBoy.
Re: Yep - Posted by ScottS
Posted by ScottS on July 12, 2002 at 01:39:40:
Johnboy,
Seems to me you’ve listened to Gattens tapes a couple times. The reply looks as if you wrote his tape script for him.
In my opinion though, it might be hard to convince a judge that a lease that was given by the trust the next day would not “relate to a transfer of rights of occupancy in the property”
I am sure this will be an arguement that will go on and on until it’s tried before a judge or the lenders start to include the PacTrust by name in the DOSC. If they do that ol’ Gatten will know he created quite a stir with his “baby”. 
Also, if you look at Yeiters report then the fact that the responsibility for the taxes and maintenance has been transferred then this would be classified a sale by the IRS and treated as such for tax issues. Does that mean it could slide by a judge? We don’t know yet and may never.
I guess it’s all in who you want to use as your quidance for legal info.
Anyways, I’ve rambled enough. Nice seeing you around.
ScottS
Re: Yep - Posted by Joe
Posted by Joe on July 12, 2002 at 01:10:56:
If it’s so great, per your long and well thought-out post, then WHY DON"T YOU USE IT? There are times when you need to put your money where your mouth is, so to speak. Otherwise it’s hypocritical.
Re: countrywide - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 12, 2002 at 01:17:18:
I don’t think it would do any good, JB. See Ron Star’s post, above. Seems like a waste of time and effort.
Here’s Gatten’s comment about the loan called by Countrywide:
Re. Countrywide, however, I can tell you they are ruthless…they called a loan on me once right after I brought them current with a $36,000 cashier’s check. They accepted the check, processed it and told me the auction would take place as scheduled on the following Wednesday (3 years and several thousand dollars in legal expenses later, we won the suit and were allowed to continue making payments to them (same loan, same terms, same interest rate).
This was from the following link:
http://www.creonline.com/wwwboard/messages/arc_2001/arc_40/40315.html
Re: countrywide - Posted by Winston, CT
Posted by Winston, CT on July 11, 2002 at 20:51:40:
John is right, you will do best if you wait. Imagine if we all wait, after they figured out that it is too expensive to pursue, maybe they will give up on chasing us, since we are paying!
Re: Yep - Posted by JohnBoy
Posted by JohnBoy on July 12, 2002 at 21:20:20:
Actually, I haven’t listened to his tapes at all. I do have his course but I haven’t read it yet.
In my opinion I don’t think the lease would have anything to do with anything. The law allows you to lease out your property as long as the lease is for less than 3 years and it does not contain an option to buy. So regardless of whether the property is leased by the seller where title remains in the seller’s personal name or whether the seller places his property into a land trust and leases out the property the next day should be irrelevant! What difference does it make if you lease out the property when its in your name or right after placing it into a land trust? As long as you remain a beneficiary of the trust you should be OK.
So if you own a property you live in and move out where you want to lease out the property that is OK and protected by federal law from violating the due-on-sale clause, but if you decide to exercise your right to place the property into a land trust and then lease it out that shouldn’t be OK just because you placed the property into a land trust??? That would not make any sense!
Here is what the clause says:
Sec. 591.5 Limitation on exercise of due-on-sale clauses.
(a) General. Except as provided in Sec. 591.4 (c) and (d)(4) of this
part, due-on-sale practices of Federal savings associations and other
lenders shall be governed exclusively by the Office’s regulations, in
preemption of and without regard to any limitations imposed by state law
on either their inclusion or exercise including, without limitation,
state law prohibitions against restraints on alienation, prohibitions
against penalties and forfeitures, equitable restrictions and state law
dealing with equitable transfers.
(b) Specific limitations. With respect to any loan on the security
of a home occupied or to be occupied by the borrower,
(1) A lender shall not (except with regard to a reverse mortgage)
exercise its option pursuant to a due-on-sale clause upon:
(C) A transfer resulting from a decree of dissolution of marriage,
legal separation agreement, or from an incidental property settlement
agreement by which the spouse becomes an owner of the property; or
(vi) A transfer into an inter vivos trust in which the borrower is
and remains the beneficiary and occupant of the property, UNLESS (key word here is UNLESS), as a
condition PRECEDENT to such transfer, the borrower refuses to provide
the lender with REASONABLE means acceptable to the lender by which the
lender will be assured of timely notice of any subsequent transfer of
the beneficial interest or change in occupancy.
There is PRECEDENT in this very law which clearly states:
(iv) The granting of a leasehold interest which has a term of three
years or less and which does not contain an option to purchase (that is,
either a lease of more than three years or a lease with an option to
purchase will allow the exercise of a due-on-sale clause);
So it would seem to me that you are protected by this very law by being allowed to lease out the property as long as the lease is for less than 3 years and does not contain an option to buy, REGARDLESS of whether you place the property into a trust or not!
The other interesting thing I read the way this law states where it says, " The granting of a leasehold interest which has a term of three years or less and which does not contain an option to purchase (that is,
either a lease of more than three years or a lease with an option to purchase will allow the exercise of a due-on-sale clause);
Notice it specifically says as long as the LEASE does not contain an option? Well we don’t have any OPTION in our leases when we do a L/O deal. The LEASE says nothing about an option. The OPTION is a SEPERATE agreement that is not within the LEASE itself! The law clearly says as long as the LEASE does not contain an option to buy. So it would seem to me by using seperate agreements you would not be violating this law since the LEASE itself, does not contain any option to buy. Only if the option was given in the actual lease agreement would it violate the DOSC under this law!
I’m not an accountant. But I do know for a fact that under a triple net lease the TENANT is responsible for paying the taxes and the IRS allows a TENANT to write off the taxes paid under a triple net lease. So using a triple net lease would not be classified as a sale! It’s only a LEASE, period! Now if you transferred the responsibility of paying the taxes and maintenance without using a triple net lease then that would be classified as a sale. It is because of the triple net lease as to why you can pass the burden of taxes and maintenance to the tenant that allows the tenant to deduct the taxes without being classified as a sale.
So the only issue I can see here is if there is anything wrong with using a triple net lease on residential property or not. A triple net lease on commercial property passes all the burden of taxes, insurance and maintenance to the TENANT and the tenant is allowed to deduct those expenses since they are the one paying them. The property cannot be classified a sale because of this. So the question is, does it matter if you are dealing with commercial property vs. residential property or not when using a triple net lease??? Apparently you can use a triple net lease when leasing residential property, so if that is the case then the same conditions should apply without having the lease classified as a sale when using a triple net lease!
Gatten posted the code above where the IRS allows this.
Re: Yep - Posted by JohnBoy
Posted by JohnBoy on July 12, 2002 at 20:23:26:
I didn’t say its so great. I only gave my opinion based on how much of it I understand. I haven’t used it YET because I don’t fully understand all the ins and outs of it as much as I like to before just jumping in and using it. But if you don’t think its great or don’t understand it or whatever your problem may be with it, then don’t use it!
Re: countrywide - Posted by JohnBoy
Posted by JohnBoy on July 12, 2002 at 21:44:42:
From what Gatten’s post sounds like is that he brought a loan current that was already in foreclosure and scheduled to go to sale already where the lender just pursued with trying to finish the foreclosure. That is a lot different that taking over a property that isn’t that far along in a foreclosure. But even in his case he won.
Ron did not use a trust and told the lender. If I remember correctly I thought there was more to that story, but I don’t recall for sure. Maybe Ron can clear this up more.
It may not do any good where they will pursue it, but why not wait until they actually do before jumping the gun and refinancing right away? Maybe they won’t and you would not have had to refinance getting a loan in your name!
I would like the legal case number for this - Posted by waynepdx
Posted by waynepdx on July 12, 2002 at 02:02:47:
What is the legal case number for this and where it was heard?
Re: Yep - Posted by ScottS
Posted by ScottS on July 12, 2002 at 23:33:07:
Johnboy,
I’ll need a day or two to get back to your post. I will need to go through my copy of Bill’s course and tapes again and find out how they are considered under the code to have the rights.
I’ll be back, LOL
ScottS
Re: countrywide - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 13, 2002 at 02:36:32:
No, no, you misunderstood. I agree with you. Wait and see if they follow through if you think it will do any good. That is, as long as you can and still have time to refi. What I’m saying is that I haven’t seen anyone say CW backed down after threatening. It wouldn’t fit their style, so it seems. Big bad lender. So do you delay the inevitable, or just bite the dust and move on?
I wouldn’t criticize anyone if they felt they wanted to wait it out.
Re: I would like the legal case number for this - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 12, 2002 at 02:13:47:
I have no idea. This was posted by Bill Gatten, the PACTrust guru. You can email him if you need a case number for some reason, at:
Re: countrywide - Posted by JohnBoy
Posted by JohnBoy on July 13, 2002 at 20:46:20:
I haven’t seen anyone saying countrywide backed down either. But I haven’t seen anyone coming back with a follow up to say they pursued it either! Nor follow up saying they just refinanced to be done with it. I don’t recall anyone ever coming back with a follow up to let us know what actually happened or what they ended up doing.
I ASSUME though, that if countrywide did pursue it someone would have at least followed up to let us know, but since I haven’t seen any follow up from anyone I don’t really know what actually happened.
Re: countrywide - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 15, 2002 at 22:14:08:
JB, I’m not sure what you’re looking for. Bill Gatten had to spend thousands and 3 years defending his position after taking over a property subject-to. Even though he rescued the house from foreclosure, his position was exactly the same as anyone buying subject-to. Ron Star had his house taken by CW and the payments were current. There are two documented examples right there, where CW threatened and followed through. Isn’t that what you’re looking for? Seems like proof to me.
Anyway, no need to debate this. You would wait them out, I would just go and refi. To each their own, eh?
Take care.
Re: countrywide - Posted by JohnBoy
Posted by JohnBoy on July 15, 2002 at 23:55:20:
Gatten’s case was different. He took over a property subject to when the property was already in foreclosure and a sale date was already scheduled to take place. Gatten sent them a check for $36k to reinstate the loan, Countrywide accepted the check and still continued with the foreclosure as already scheduled. This wasn’t a case where the property wasn’t in foreclosure, or a property in the begining stages of foreclosure, it was in foreclosure where they were set to go to sale on a specific date. So the lender just continued with the foreclosure since they were so far along in the process. Only Gatten was able to stop it and won his case later.
Ron Star took a property subject to in his personal name where the lender found out and it was obvious the property was deeded to him.
What I’m looking for is follow up on these cases that property was purchased subject to, deeded to a trust, payments were being made on time where the loan was current, then later the lender found out and sent notice they were calling the loan. But I haven’t seen anyone follow up with those cases to report what the final out come was. Did they just refinance? Did they wait to see if Countrywide followed through before refinancing? Did Countrywide not pursue it all the way?
In Gatten’s case I can see where the lender pursued it. They were to far along in the foreclosure process to gamble on anything after all the months that were already behind. If it took $36k to reinstate then that sounds as if the payments were around a year behind! I don’t know what the payments were, but take off $5k for attorney fees, then divide the remaining $31k over 12 months and that is a payment of $2,583 per month. So it would appear the payments were already 8 - 12 months or more behind at the time Gatten came along and reinstated. But since the lender was so far along in the foreclosure process they continued with moving forward as scheduled. Unless this was a property that had $10k per month payments that was only 3 months behind?
Re: countrywide - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 16, 2002 at 24:47:16:
Ron took the property subject-to, without a trust, and told CW. Whether there was a trust or not doesn’t matter. If he had placed it in a trust and still told them about it, they still would have accelerated. We’re back to the lender finding out through being told.
In Gatten’s case, CW had no legal right to continue with the foreclosure auction. The foreclosure laws in the US are meant to protect consumers from lenders making up their own rules. The loan was no longer in arrears, therefore, they had no right to foreclose. They can’t just decide they’ve gone too far to stop the foreclosure procedings. Borrowers have up until the day before the sale to correct the situation.
Now if they had CHANGED to an acceleration because of the DOS clause (deed in Gatten’s name), they would have had to start a whole new legal process, not just continue with the foreclosure.
What I’m trying to say is, they’ll do whatever they darn well want to (those bloodsuckers! LOL!). So, in my mind, I’m satisfied that when CW sends me a notice of acceleration, I absolutely believe they will follow through. I’ll chose my battles…and this ain’t one of them.
But, knowing you and the way you start to drool at the thought of putting on a defense in a courtroom, I wouldn’t put it past you to egg them on if they would ever threaten to accelerate one of your loans! JB, we’re just built different that way. (smile)
Re: countrywide - Posted by Bud Branstetter
Posted by Bud Branstetter on July 16, 2002 at 13:04:09:
Been out of town and on vacation a lot lately but this thread seemed interesting.
Texas has a similar foreclosure feature. Once the demand is made and past you can accelerate the whole amount. You do NOT have to reinstate. Most do and I speculate that Gatten’s case was partly that they accepted the money without specifing first that they would not reinstate.
Rob(FL) sited a case awhile back in which the lender accepted payments for some time then exercised the DOS. The judge said that if they gave all the money back then they could foreclose.
Since I have been away I haven’t heard of this $Cash$ guy. Anyone know anything from is posts? Shill? For real? Obviously not from Texas.