Posted by Randy Jensen on March 20, 2001 at 23:25:57:
I finally was able to find the source email that I was thinking about. It comes from the mananging broker of my office, who alsohappens to teach the colorado real estate licensing courses. His info comes from the dep director of the Colorado dept of real estate, and our corporate council Frascona, Goodman et al. Their web site which I might add gives a lot of very interesting legal views and info that anyone would be well within their best interests to read. Their site is www.frascona.com I am in no way affiliated with them, this is just for education sake.
The email is as follows:
n a recent conversation with Jon Goodman at Frascona, Joiner and Goodman,
PC, we asked for an update on the moratorium against wrapping loans with a
due on sale clause, initiated in 1998 by the RE Commission. In his recent
conversations with Harry Reagan, the Deputy Director, we learned that . . .
1.) It is still illegal (a Federal Offense) to wrap an FHA or VA Loan with a
due on sale clause.
2.) It is still against Colorado RE Commission policy for a licensee to wrap
a conventional loan with a due on sale clause, particularly to orchestrate
such a transaction. This has not been modified yet.
3.) It is not against any rules to wrap a loan without a due on sale clause,
but you’ll have a hard time finding one.
Terry Hassett
Real Estate Professional Since 1978
RE/MAX FIRST ASSOCIATES, INC.
4703-A Boardwalk Drive
Fort Collins, Colorado 80525
970-226-xxxx ex. 250
This makes more sense now. It seems that the State Real Estate commission has outlawed the participation of licensed agents in wrap transactions. The following information is more for the board’s benefit, than your own, Randy:
State Real Estate commissions do not make laws, but they do make policies governing the activities of licensees, and they wield enormous power over them. Penalties exacted against licensees for violations of those policies can range from censure, to permanent revocation of a license. So, if you’re in Colorado, you may have a tough time getting an agent to present a wrap offer, whether it’s illegal or not, simply because the commission THINKS it is, and thus has prohibited it amongst agents.
This is actually very useful information, especially if you have a license such as myself. I’ll have to check to see if the Florida Commission made a similar rule. Even if they did, I imagine I’m okay as long as I’m acting as a principal, but it might be hard getting agents to bite on listed props. Still, why would the state commissions outlaw this, but leave it on the forms? Sounds like one of those times where it’s better to ask for forgiveness than permission.
In paragraph #1 for example it states that “wrapping” a VA loan is “illegal (a federal offense)”. Again, let me repeat from my prior post…VA expressly permits the purchase of properties with modern VA loans on them with land contracts. Do you call a land contract a “wrap”. Check the VA Guide Book.
Because of this misinformation…it then becomes hard to believe that Terry Hassett has got any of his other information correct either. Please show me something in writing in the Colorado law or from the Colorado real estate commission which prohibits “wraps” on any government loan or any loan with a due on sale clause.
Again, you have NOT produced a cite, you have not produced a single fact. Rather you have produced an email written by some character named Terry Hassett. Are these facts? We don’t know. What we do know is that if “wraps” are illegal in the state of Colorado then there should be something in writing stating this. WHERE IS IT???
I hope Bronchick likes gruel - Posted by Stacy (AZ)
Posted by Stacy (AZ) on March 21, 2001 at 12:10:08:
Here’s a website that contains Colorado real estate forms. Look at the bottom. Bronchick’s “wrap” contact addendum is there for your use, as well as his CYA form regarding the due on sale clause in subject-to deals. It is not approved by the Colorado Real Estate Commission, but, if a real estate attorney who practices law in the state of Colorado wraps loans containing a due on sale clause, do you think he’s going to end up in jail? Oh, I hope not. I like Bill.