What You Missed - June General Meeting

by Robert Davis

The panel of experts at the June General Meeting consisted of Lettie Tice of Next Generation Financial Services, Chuck Collova of C & C Financial Services, Dale Appell of Tampa Bay Hard Equity, and Edward Serralles of the Serralles Group.

The theme of the evening was various aspects of financing. Chuck began by noting there have been 11 major changes in the financial picture in less than a year. Two changes that were made related to who can order an appraisal for your sale and until April of this year you were limited to 4 bank mortgages, down from 10 previously. This has been reversed now. Chuck said the ten-year treasury rate is what controls the interest rate for most banks. There are no more stated income loans or “no doc” loans for good rates. The best rate is for a 740 or higher score, and there is a max of 80% LTV for investor loans. He said there are great deals for cash, and that Cash is King right now.

The discussion continued with Eddie Serralles talking about the B C market, how it got started and why it is currently gone. This type of loan allowed the markets to thrive, but it wasn’t regulated well enough. Dale discussed the hard money business. Some lenders got caught up in the rapid rise in prices. For a while even if you made an error in buying – the prices were going up so fast you could still get out or make a profit. Then came the bubble bursting and many investors were stuck with unsold houses and thus the lenders were not paid. Many lenders, including Dale, were forced to foreclose on loans and acquire houses they did not want. This caused a dry-up of money for investors. He advised people to do the numbers with diligence to be sure of good exit strategies or holding strategies before buying. Dale has currently reverted to using prices from 2001 to set the percentage of money he will loan on a property. Chuck said this is why lenders are forcing borrowers to go through extra hoops to get a loan. He said appraisers are required to do a market analysis that includes a value for 6 months and 12 months into the future to determine the current value.

There were some other interesting points brought out. For example, mortgages for $50,000 or less are hard to get because of lenders not being able to get very good fees for these. B C loans will return at some time in the future. Some people are just collecting rents and not paying the mortgages. A tenant may have up to 3 months to move out of a foreclosure property. Lettie Tice and her associate Greg King talked about using reverse mortgages. The new ones are much better than in the past. These basically use your equity in a property to pay you a lump sum or a monthly payment for the rest of your life. There are of course certain requirements to obtain this type of loan.

The final thought was the market is at a half-way point. We should use conservative numbers in figuring deals. If we stretch things to try to make a deal seem good, we may end up in financial trouble. It is still a volatile market and we need to use caution and common sense in doing deals. Over all it was a very informative evening


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