Podcasts about closing disclosure

Keith discusses the mortgage landscape, emphasizing the benefits of cash-out refinances with Ridge Lending Group President, Caeli Ridge. They unpack the Trump administration's plan to privatize Fannie Mae and Freddie Mac, which could impact the mortgage market. Investors are discovering powerful strategies to leverage property equity and optimize their financial portfolios. By understanding innovative borrowing techniques, savvy real estate investors can access tax-efficient capital and create sustainable wealth-building opportunities. Consider working with a lender that specializes in investor-focused loan products and provides comprehensive education on the options available.  Resources: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Show Notes: GetRichEducation.com/554 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching: GREinvestmentcoach.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review”  For advertising inquiries, visit: GetRichEducation.com/ad Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  0:01   Welcome to GRE. I'm your host. Keith Weinhold, we're talking about the mortgage loan landscape in this era. Is title insurance a rip off today? Is it worth it for you to pay discount points at the closing table to get a lower interest rate? Learn about how a cash out refinance. Is your ability to borrow tax free, much like a billionaire does, and what are the dramatic changes that the current administration could take to alter the mortgage environment for years, all today on get rich education.    Speaker 1  0:34   Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, who delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com   Corey Coates  1:20   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:36   Welcome to GRE from Liverpool, England to Livermore, California and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education, the voice of real estate. Since 2014 it's been estimated that there are about 800 billionaires in USA, and hey, you might be one of them, but there's a pretty good chance that you aren't well. When it comes to lending and mortgages, you can actually take a page out of a billionaires playbook and do something very much like what they do whenever you perform a cash out refinance if you've got dead equity in a property, and you can borrow against your own home to a greater extent than you can against your rental properties, even either one of those is a tax free event, you've now got tax free cash, and you can use that money on anything from investing it in the stock market To using your proceeds for a down payment on more real estate or buying a boat or going to Disneyland, and you didn't have to relinquish your asset at all. You continue to hold on to the asset. Now, the mechanics are somewhat different, sure, but when you do a cash out refinance like this, it's a bit like billionaires borrowing against their stock. Instead, you're borrowing against the value of your real estate. In fact, listening to this short clip, it's Trevor Noah talking about how billionaires do exactly this, and you'll notice that the crowd laughs because it actually sounds funny that you can really do this,    Speaker 2  3:22   the shares that they hold in a company, because it is an unrealized gain, right? So they go like, yeah, you're worth 300 billion, but we can't tax you on those stocks because you haven't sold the shares, so you don't, like, have the money. And I understand the argument. They go like, No, you don't have it. It's just what it's worth, because it will also crash, and then you have nothing, so we can't tax you on it. Then I'm like, Okay, I understand that. Then Elon Musk offers to buy Twitter, all right? He offers to buy it. And then he says in his offer, he goes, I'm putting up my Tesla stock as collateral. Then I'm like, so you do have it? Then he's like, no, no, no, no, I don't have it. I don't have it. I'm just gonna say so then they accept the offer. He now buys Twitter. Now that they've accepted his offer, he now goes to private equity and banks and like other rich people and whatever. He goes like, can you guys borrow me the money to buy Twitter? And then he's like, I'm I want to buy Twitter because I don't want to sell any of my Tesla shares, so I want to use your money to buy Twitter. And then it's like, but then they're like, What are we loaning it against? And he's like, Well, my Tesla shares. Then I'm going, like, Wait, so, so you, you can, you can buy a thing based on what you have, yes, but when we want to tax you, you can say, I don't have it. Do you hear what I'm saying here?   Keith Weinhold  4:46   Yeah, you can borrow against your real estate if you have substantial equity in it. We'll talk about just how much now billionaires borrow against their stock holdings using financial products like portfolio lines of credit or. For securities based loans. These are the names for how they do it, essentially taking out loans and using their stock as collateral. And this allows them to access cash without selling their assets and without incurring capital gains taxes, much like you can so you can say that you don't want to sell your property in you don't have to go through some capital raising round either, like a billionaire might have to when they're borrowing against their stock. You can just have a more standard mortgage application for your cash out refinance, and you don't even have to have a huge portfolio. I mean, even if you just own one 500k property with 50% equity in it, you can do this so it's available to most any credit worthy person, again, tax free. But of course, this doesn't mean that you always should take this windfall, because it often creates a higher monthly payment. You've got to be the one that makes that decision in controlling your cash flows, that is key. I'll talk about that some more with today's terrific guests. Also the Trump administration's desire to privatize Fannie Mae and Freddie Mac we're going to talk about that and what that would do to the mortgage landscape. I am in the USA today, next week, I'll be bringing you the show from London, England for the first time, the following week, from Edinburgh, Scotland. Yes, the mobile GRE Studio will be in effect. I typically set it up myself, and I usually don't need the help of the hotel staff for an appropriate Sound Studio either. And then shortly after that, I will be in Anchorage, Alaska, where I'm competing in these fantastic mountain running races. And then by next month, that's where I hope to meet up with you in person for nine days of learning and fun, as I'll be in Miami as part of the faculty for the terrific real estate guys invest or summon at sea, where we're all going to disembark from Miami and go to St Thomas, St Martin and the Bahamas, and then after that great event, it is a long flight from Miami back to Anchorage again. And that's got to be one of the longer domestic flights, not just in the nation, but in the world, Miami to Anchorage, and then shortly after that, I will be in the Great Northeast early this summer, New York and Pennsylvania, including for my high school reunion. So I'll really be putting the miles on these next couple months. One interesting thing that I've noticed for next week's show, where I'll be joining you from London, is how much I'm paying per night at both my hotel in England and then later my hotel in Scotland. That's obviously a short term real estate transaction. These are some of the more expensive places in the world, really. So next week and then the week after, I just think you'll find it interesting. I'll tell you how much I'm spending per night in both London and then Edinburgh. And they're both prime locations, where the hotels are the center of London and then right on Edinburgh's Royal Mile. That is in future weeks as for today, let's talk about the mortgage landscape with this week's familiar and terrific guest.   I'd like to welcome in one of the more recurrent guests in our history, so she needs little introduction. She's the longtime president of the mortgage company that's created more financial freedom for real estate investors than any lender in the nation because they specialize in income property loans. It's where I get my own loans for my own rental properties. Ridge lending group. Hey, welcome back to GRE Caeli ridge.    Caeli Ridge  8:57   Thank you, Keith. You know I love being here with you and your listeners. I appreciate you having me.   Keith Weinhold  9:01   You've helped us for so long. For example, who can forget way back in episode 56 Yeah, that's a deep scroll back when Chaley broke down each line of a good faith estimate for us, that's basically a closing statement sheet. She told us exactly what we pay for at the closing table, line by line like origination fee, recording costs and title insurance so helpful. It's just the sort of transparency that you get over there. Buyers pay for title insurance at the closing table. It is title insurance a rip off. A few years ago, a lot of people speculated that title insurance would fade away because the property's ownership could be transparent and accessible to everybody on the blockchain, but we don't really see that happening. So tell us about title insurance, and really, are we getting value in what we pay for there at the closing table?   Caeli Ridge  9:54   Well, I think the first thing I would say is that it really isn't going to be an option as far as I. Know, as long as the individual is going to source institutional funding leverage use of other people's money, they're going to require the lender, aka Ridge lending, or whoever you're working with, they're going to require that title insurance that ensures their first lien position. Doing that title search, first and foremost, is going to make it clear that there isn't some cloud on title, that there isn't some mechanic lien that had been sitting out there for however many years it may have just been around. And those types of things never go away. So for a lending perspective, it's going to be real important that that title insurance is paid for and in place to protect their interests, things like judgments, tax liens, like I said, a mechanic's lien, those will automatically take a first lien position in front of a mortgage. So obviously we're not going to risk that and find ourselves in second lien position in the event of default and somebody else is getting paid before we are. So not really an option. Is it a rip off? I don't know enough about how often it's paid out, and not to speak to that, but I will tell you that it isn't a choice.   Keith Weinhold  11:07   Title Insurance, like Shaylee was talking about. It protects against fraud related to the property's ownership, someone else claiming rights to the property, and this title search that an insurer does it also, yeah, it looks for those liens and encumbrances, including unpaid taxes, maybe unpaid HOA dues, but yeah, mortgage lenders typically require title insurance, and if you the borrower, you might think that's annoying. Well, it does make sense, because the bank needs to protect their collateral. If a bank ever has to foreclose, they need to have access to you, the borrower, to be able to do that without any liens or ownership claims from somebody else. Caeli, how often do title insurance companies mess up or have to pay out a claim? Does that ever happen?   Caeli Ridge  11:50   I mean, if I have been involved in a circumstances where that was the case, it's been so many years ago, they're pretty fastidious. I don't know that I could recall a circumstance where something had happened and the title insurance was liable. They go through the paces, man, they've got to make sure that, and they're doing deep dives and searches across nationwide to make sure that there isn't any unnecessary issue that's been placed on title Not that I'm aware of. No.    Keith Weinhold  11:50   Are there any of those other items that we tend to see on a good faith estimate that have had any interesting trends or changes to them in the past few years?    Caeli Ridge  12:27   Yeah, I've got a good one, and this is actually timely credit reports. So over the last couple of years, something has been happening with credit reports where, you know, maybe three, four years ago, a credit report, let's say a joint credit report, a husband and wife went and applied that credit report might cost 25 bucks. Well, now it's in excess of 100 plus. Some of what we're going to be talking about today, it kind of gets into the wish list of Jim neighbors, who is the president of the mortgage brokers Association. He's been talking to the administration about some of his wishes, and credit report fees is actually one of the things that they're wanting to attack and bringing those costs down for the consumer. So when we look at a standard Closing Disclosure today, credit report costs have increased significantly. I don't have the percentages, but by a large margin over the last couple of years,    Keith Weinhold  13:21   typically not one of your bigger costs, but a little noteworthy. There one thing that people might opt and choose to have on their good faith estimates, so that borrower therefore would actually pay more out of pocket with today's higher mortgage rates. And I'm sure not to say high, because historically, they are not high. Do we see more people opting to pay discount points at the closing table to get a lower rate and talk to us about the trade offs there   Caeli Ridge  13:46   right now, first and foremost, that there isn't a lot of option for investment property transactions, whether it be a purchase or refinance. There's not going to be that option where the consumer gets to choose to say, Okay, I want to pay points for a lower rate or not pay points for a higher rate the not paying points is the key here. There isn't going to be a zero point option for investment property transactions. And this gets a little bit convoluted, and then I'll circle back and answer the question of, when does it make sense to pay the points, more points versus less points? We have been in a higher rate environment that I think a lot of people have become accustomed to as a result secondary markets, where mortgage backed securities are bought and sold, they keep very close tabs on the trends and where they think things are headed. Well, something called YSP, that stands for yield, spread, premium, under normal market circumstances, a consumer can say, okay, Caeli, I don't want to pay any points. Okay, I'll take this higher interest rate, and I don't want to pay any points, because that higher interest rate is going to have YSP, yield, spread, premium to pay compensation to a lender, and you know, the other third parties that may be involved in that mortgage backed security. But. Sold and traded, etc, okay? They have that choice under normal market circumstances. Not the case right now, because when this loan sells the servicing rights, whoever is going to pick up the servicing rights, so when Mr. Jones goes to make his mortgage payment, he's going to cut a check to Mr. Cooper. That's a big one, right? Or Rocket Mortgage, or Wells Fargo, whoever the servicer is, the servicing rights are purchased at a cost. They have to pay for the servicing rights, and let's say that's 1% of this bundle of mortgage backed securities that they're purchasing. Well, they know the math is, is that that servicer is going to take about 36 months before that upfront cost is now in the black or profitable. This all will land together. Everybody, I promise you stick with me, so knowing that we've got about a 36 month window before a servicer that picked up the rights to service this mortgage is going to be profitable in a higher rate environment, as interest rates start coming down, what happens to the mortgage that they paid for the rights to service 12 months ago, 18 months ago, that thing is probably going to refinance right prior to the 36 month anniversary of profitability. So that YSP seesaw there is not going to be available for especially a non owner occupied transaction. So said another way, zero point rates are not going to be valid on a non owner occupied transaction in a higher rate environment when secondary markets understand that the loans that are secured today will very likely be refinanced prior to profitability on the servicing side of that mortgage backed security that is a risk to the lender, yes. So we know that right now you're not going to find a zero point option. Now that may be kind of a blanket statement. If you were getting a 30% loan to value owner occupied mortgage with 800 credit scores, you know that's going to be a different animal. And of course, you're going to have the option to not pay points. The risk for that is nothing. Okay, y SP is going to be available for you, the consumer, to be able to choose points at a lower rate, no points higher rate. When does it make sense to pay additional points? Let's say to reduce an interest rate, the break even math. And you know, I'm always talking about the math, the break even math is actually the formula is very simple. All you need to do is figure out the cost of the points. Dollar amount of the points, let's say it's $1,000 and that's what it's going to cost you to, say, get an eighth or a quarter or whatever the denomination is, in the interest rate reduction. But you aren't worried about the interest rate necessarily. You're looking at the monthly payment difference. So it's going to cost you $1,000 in extra points, but it's only going to save you $30 a month in payment when you divide those two numbers, what's that going to take you 33 months? 30 well, okay, and does that make sense? Am I going to refinance in 33 months? If the answer is no, then sure pay the extra 1000 bucks. But that's the math, the cost versus the monthly payment difference divide that that gives you the number of months it takes to recapture cost versus cash flow or savings, and then you be the determining factor on when that makes sense.    Keith Weinhold  18:10   It's pretty simple math. Of course, you can also factor in some inflation over time, and if you would invest that $1,000 in a different vehicle, what pace would that grow at as well? So we've been talking about the pros and cons of buying down your mortgage rate with discount points before we get into the administration changes. Cheley talk about that math in is it worth it to refinance or not? It's a difficult decision for some people to refinance today with higher mortgage rates than we had just a few years ago, and at the same time, we've got a lot of dead equity that's locked up.   Caeli Ridge  18:40   I would start first by saying, Are we looking to harvest equity? Are we pulling cash out, or are we simply doing a rate and term refinance where we're replacing one loan with another loan, if it's for rate and term, if we're simply replacing the loan that we have today with a new loan, that math is going to be pretty simple. Why would you replace 6% interest rate with a 7% interest rate? If all other things were equal, you wouldn't unless there was a balloon feature, or maybe an adjustable rate mortgage or something of that nature involved there that you have to make the refinance. So taking that aside, focusing on a cash out refinance, and when does it make sense? So there's a little extra layered math here. The cash that you're harvesting, the equity that you're harvesting, first of all, borrowed funds are non taxable. What are we going to do with that pile of cash? Are we going to redeploy it for investing more often than not talking to investors? The answer is yes. What is that return going to look like? So you've got to factor that in as well, and then we'll get to the tax benefit in a moment. But generally speaking, I like to as long as the cash flow is still there, okay, you've got to have someone else covering that payment. Normally, there's exceptions to every rule. I don't normally advise going negative on a cash out refi. There are exceptions. Okay, please hear me. But otherwise, as long as the existing rents are covering and that thing is still being paid for by somebody else, then what you want to do is look at that monthly payment. Difference again, versus what you're getting out of it. And then you divide those two numbers pretty simply, and it'll take you how long. And then you've got a layer in the cash flow that you're going to get from the new acquisitions, and whether that be real estate or some other type of investment, whatever the return is, you're going to be using that to offset. And then finally, I would say, make sure that you're doing adding in the tax benefit. These are rental properties guys, right? So closing costs can be deducted now that may end up hurting debt to income ratio down the road. So don't forget, Ridge lending is going to be looking at your draft tax returns. Very, very important to ensure that we're setting you up for success and optimizing things like debt to income ratio on an annual basis.   Keith Weinhold  20:40   Now, some investors, or even primary residence owners might look at their first and only mortgage on a property, see that it's 4% and really not want to touch that. What is the environment and the appetite like today for having a refinance in the form of a second mortgage? That way you can keep your first mortgage in place and, say, 4% get a second mortgage at 7% or more. How does that look for both owner occupied and non owner occupied properties today?   Caeli Ridge  21:07   you're going to be looking at prime, plus, in many cases, if you don't want to mess with a first lien, a second lien mortgage is typically going to be tied to an index called prime. Those of you that are familiar with this have probably heard of that. Indicee. There's lots of them. The fed fund rate, by the way, is an index. There's lots of them. The Treasury is also another index. Prime is sitting, I think, at seven and a half percent. So you're probably going to be looking at rate wise, depending on occupancy and credit score and all of those llpas that we always talk about, loan level, price adjustment. You know, it could be prime plus zero, it could be prime plus four. So interest rates could range between, say, seven and a half, on average, up to 11 even 12% depending on those other variables. More often than not, those are going to be interest only. So make sure that you're doing that simple math there. And I would prefer if I'm giving advice the second liens, the he loan, which is closed ended, very much like your first mortgage, it's just in second lien position. It's amortized over a certain period of time, closed ended. Not as big a fan of that. If you can find the second liens, especially for non owner occupied, I would encourage it to be that open ended HELOC type.    Keith Weinhold  22:15   What are we looking at for combined loan to value ratios with second mortgages    Caeli Ridge  22:19   on an owner occupied I think you'd be happy to get 90. I think I've heard that in some cases, they can go up to 95% in my opinion, that would go as high as they'll let you go right on a non owner occupied, I think you'd be real lucky to find 80, and probably closer to 70.    Keith Weinhold  22:34   That really helps a lot with our planning. Well, the administration that came in this year has made some changes that can create some upheaval, some things to pay attention to in the mortgage market. We're going to talk about that when we come back. You're listening to get rich education. Our guest is Ridge lending Group President, Caeli Ridge I'm your host, Keith Weinhold.    The same place where I get my own mortgage loans is where you can get yours. Ridge lending group  NMLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Chaeli Ridge personally while it's on your mind, start at Ridge lendinggroup.com. That's Ridge lendinggroup.com.    You know what's crazy? Your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns, and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money back. No weird lockups or anything like that. So if you're like me and tired of your liquid funds just sitting there doing nothing. Check it out. Text family to 66866, to learn about freedom. Family investments, liquidity fund again. Text family to 66866   Hal Elrod  24:38   this is Hal Elrod, author of The Miracle Morning and listen to get rich education with Keith Weinhold, and don't put your Daydream.   Keith Weinhold  24:55   Welcome back to get rich education. We're talking about mortgages again, because this is one. Where leverage comes from. I'm your host. Keith Weinhold, we're sitting down with the president of ridge lending group, Caeli Ridge, and I know that she has some knowledge and some updates on new administration leadership and some potential changes for the market there. What can you tell us? Caeli   Caeli Ridge  25:16   I'm pretty excited about this one, and I'm watching very diligently to see how it unfolds. So the new director of the FHFA Federal Housing Finance Agency, all is Bill Pulte. This is the grandson of Pulte Homes. Okay, smart guy. I'm excited to see what he's going to come in and do. Well. He had recently, I think in the last couple of weeks, he put out in the news wires asking for feedback from the powers that be, related to Fannie and Freddie, what improvements they would like to see. So first up was Jim neighbors. He is the president of the mortgage brokers Association. He had a few very specific wish list items, if you will. And the first one on his list was the elimination of LLP, as for non owner occupied and second home. So let me just kind of paint a picture here, because there's some backstory I think is important. So an LLPA, for those of you that have never heard that term before, stands for a loan level price adjustment. And a loan level price adjustment is a positive number or a negative number that associates with the individual loan characteristics. So things like loan to value or loan size, occupancy is a big ll PA, the difference between an owner occupied where you live and one that you're going to use as a rental property, that's a big one. Credit score, property type, is it a single family? Is it a two to four? Is this a purchase? Is it a refi? Anyway, all of those different characteristics are ll pas. Well, if we take a step back in time, gosh, about three years ago now, Mark Calabria, at the time, was the director of the FHFA, and he had imposed increases, specific increases. This was middle of 22 I want to say specific increases to the LL pas for non owner occupied property. So if anybody kind of remembers that time, we started to really see points and interest rates take that jump sometime in 2022 more than just the traditional interest rate market and the fluctuations. This was very material to investment property and second home, but we'll focus on the investment property. So Mr. Jim neighbors came in and said, first and foremost, I'd like to see those removed, and I want to read something to the listeners here, because I thought it was very interesting. This is something I've been kind of preaching from the the rooftops, if you will, for many, many years. Yeah, we've got neighbors sticking up for investors here. He really is. And I Yeah, well, yes, he is. And more often than not, they're focused on the owner occupied so I'm just going to kind of read. I've got my cheat sheet here. I want to make sure I get it all right for everybody. So removal of the loan level price adjustments on investment properties and second homes, he noted that these risk based fees charged by Fannie and Freddie discourage responsible buyers from purchasing second homes and investment properties, with that insignificant increase to cost. And here's the important part, originally introduced to account for additional credit risk, many of the pandemic era llpa increases were not based on updated risk metric. In fact, data has shown that loans secured by investment properties often have strong credit profiles and lower than expected default rates. I mean, anybody that has been around long enough to see what we've come from, like, 08,09, and when we had the calamity of right, the barrier for entry for us to get any conventional financing as investors has been harsh. I mean, I make that stupid joke of vials of blend DNA samples. But aside from it being an icebreaker, it kind of feels true. We really get the short end of the stick. And I feel like as investors especially, post 08,09, our credit profiles, our qualifications, the bar is so high for us, the default risk there has largely been removed. We've got so much skin in the game. With 20 25% down, credit score is much higher, debt to income ratios more scrutinized, etc, etc. So I think that this is, if it passes muster. I think this is going to be a real big win for the non owner occupied side of agency, Fannie, Mae, Freddie, Mac lending.   Keith Weinhold  29:13    The conventional wisdom is, is that if you the borrower, get into financial trouble, you're more likely to walk away from your rental properties than you are your own home and neighbors, sort of like a good neighbor here sticking up for us and stating that, hey, us, the investors, we're actually highly credit worthy people.   Caeli Ridge  29:29   Yeah, absolutely. So fingers crossed. Everybody say your prayers to the llpa and mortgage investor rates gods.   Keith Weinhold  29:37   we'll be attentive to that. What other sorts of changes do we have with the administration? For example, I know that Trump and some others in the administration have talked about privatizing the GSEs, those government sponsored enterprises, Fannie, Mae, Freddie Mac and what kind of disruption that would create for the industry. Is it really any credence to that?   Caeli Ridge  29:58   They've been talking about it for. For quite a while. I mean, as long as Trump has been kind of on the scene, that's been maybe a wish list for him. I don't see that happening over the next years. That is an absolute behemoth to unpack and make a reality. Speaking of Mark Calabria, he was really hot and heavy on the trails of doing that. So what this is, you guys so fatty Freddy, are in conservatorship that happened back post 08,09, and privatizing them and making them where it is not funded, or conservatorship within the United States government. Now it still has those guarantees against default. It's a very complicated, complex, nuanced dynamic of mortgage backed securities, but if we were to privatize them at some point now, am I saying that that's a bad thing? No, not necessarily, but I think it has to be very carefully executed, and because there are so many moving parts, I do not think that just one term of presidency is going to make that happen. If we do it, it's going to be years down the road from now. Is my crystal ball. I don't think we're going to see that anytime soon.    Keith Weinhold  30:58   That's interesting to know. Are there any other industry changes that are important, especially for investors, whether that has to do with the change in administration or anything else?   Caeli Ridge  31:08    Well, specific to that wish list from Mr. Neighbors, one of the other things that he had asked, and there were quite a few, for owner occupied changes as well, he wants to reduce the seasoning for cash out refinances of investment properties, which would be huge good. Yeah, right now it's 12 months on a cash out refinance given very specific acquisition details. Okay, I won't go down that rabbit hole, but currently, if you haven't met exactly these certain benchmarks, you may have to wait 12 months to pull cash out of a property from the day that you acquire it, he's asking that that be pulled back to about six months, which would be nice   Keith Weinhold  31:46   reducing the seasoning period from 12 months to six months, meaning that an investor a borrower, would only need to own that property for that shorter duration of time prior to performing a refinance.   Caeli Ridge  31:58    Cash out refinance, no seasoning required on a rate and term. This is specific for cash out. But again, for cash out, but exactly right   Keith Weinhold  32:04   now, one trend that I think about sometimes, especially when I think back to 2008 2009 days since I was an investor through that time, is, are there any signs in the reduction of the appetite or the propensity to lend, to make loans. So how freely is credit flowing?    Caeli Ridge  32:25   I think pretty freely. I'm not seeing that they're tightening the purse strings. That's not the lens that I'm looking at it from, and I try to keep that brush stroke broad. There have been, I think that on the post, close side, there's been a little extra from Fannie Freddie, and I think that has to do with profitability markers. But overall, I'm not seeing that products are disappearing necessarily, or that guidelines are really becoming even more cumbersome. If anything, I would say it's maybe the reverse of that, and I do believe that probably is part and parcel to this administration and the real estate background that comes with it.   Keith Weinhold  32:59   One other thing I pay attention to, but it just really hasn't been much of a story lately. Are delinquencies in foreclosures. It seems like they've ticked up a little bit, but they're still both really historically low and basically a delinquency being defined as when a borrower makes one late payment, and foreclosures being the more severe thing, typically a 120 days late or more. Any trends there? I'm not   Caeli Ridge  33:24   seeing any now. And in fact, I would tell you that, because we focus so much on investor needs, first payment default is I can count on less than one hand, if I had to, how many times I've seen that happen with our clients over 25 years. So nothing noteworthy there for me.    Keith Weinhold  33:40   Yes. I mean, today's borrowers are just flush with equity. Nationally, there's a loan to value ratio of 47% which is healthy, in a sense. On average, borrowers have a 53% equity position. Of course, the next thing, I think, is like, I don't really know if that's a smart strategy. They're not really getting that much leverage out there. But I think a lot of people just have the old mentality of get it paid off.    Caeli Ridge  34:06   And I think that depending on where you are in your journey, I mean, if you're in phase three, right, where you're just really looking at these investments, these nest eggs to carry you into your retirement and or for legacy reasons, fine, but otherwise, I may argue the point in that I don't care that you have a 3% interest rate on an investment property, or whatever it may be, if it's sitting there idle and as long as it can cash flow, the true chances of those individuals of keeping that mortgage that they got in 2020, 2021, etc, at those ridiculously low interest rates and stroking 360 payments later to pay it to zero is a fraction of a percent right now, whether they're on the sidelines for something else, I don't know, but that debt, equity, I think, is hurting them more than a 3% interest rate is helping them.   Keith Weinhold  34:52    And a lot of times, the mindset of someone is, if they don't need to build wealth anymore, and they're older and they already built wealth, they don't care if they're loaned to value. Was down to zero, and they have it paid off, whereas someone that's in the wealth building phase probably wants to get more leverage. Yeah, Chaley at risk lending group, there you see so many applications come in, and especially since you're an investor centric lender, I like to ask you what trends you're seeing. What are people buying? What are people doing? Are they refinancing? Are they paying loans off? Are they trying to take out more credit? Are there any overall trends with investors that you see in there    Caeli Ridge  35:29   right now? I think the all in one is a clear winner there. The all in one, that first lien, HELOC, that you and I talked about, we broke my little corner of the internet with that one, that one is a front runner for sure, on the refinance side, specifically, we are seeing quite a bit more on the refi side of things, that equity is kind of just sitting there. So even though, if the on one isn't a good fit for them, I'm seeing investors that are willing to tap into that equity instead of just sitting around and waiting for them to potentially lose some equity if the housing market does start to take some decline. And then I would say, on the purchase transaction side, something that's kind of piqued my interest is the pad split. I'm looking at that more often where, for those that are not familiar, you can probably speak more to this, Keith, they're buying single family resident properties, even two to four unit properties, and a per bedroom basis, turning those into rental properties. And they're looking to be quite profitable. So I've got my eyes on that too.   Keith Weinhold  36:23   before we ask how we can learn more about you and what you do in there at Ridge Kayle. Is there any last thing that you'd like to share? Maybe a question I did not think about asking you, but should have.    Caeli Ridge  36:35   I would like to share with your listeners that if they are not working with a lender that focuses on their education and has that diversity of loan product that we have, that they're probably in the wrong support group. You need to be working with a lender that has a nationwide footprint and that has diversity of loan product to cover whatever methodology of real estate investing that you're looking for, and really puts a fine touch on the education of your qualifications and your goals as they relate to underwriters guidelines   Keith Weinhold  37:10   what we're talking about, and I know this through my own experience in dealing with Ridge, since I use them for my own loans myself, is sometimes Ridge might inform You that, hey, you can go and do this and make this deal now, but that's going to mess up this bigger thing 12 months down the road, whereas if you talk with an everyday sort of owner occupant mortgage company, oh, they're just not going to talk like that, because owner occupants, they might only buy every seven years, or something like that. And investors are different, and you need to have that foresight and look ahead. Caeli, this has been great, a really informative conversation about the pulse of the market. Tell us what products that you offer in there.   Caeli Ridge  37:50   Our menu is very, very diverse. I would say what. It's probably easier to describe what we don't offer. We do not have bear lot loans or land loans. We're not offering those right now. We do not have second lien HELOCs currently. We suspended that two years ago. But otherwise, guys, we're going to have everything that you're going to need. So just very quickly, I'll rattle off Fannie Freddie, okay, those golden tickets that we talk about, we've got DSCR loans, bank statement loans, asset depletion loans, ground up construction, short term bridge loans for fix and flip or fix and hold. We have our All In One that's my favorite first lien. HELOC, we have commercial loan products for commercial property and residential on a cross collateralization basis. So very, very robust in the loan product space.   Keith Weinhold  38:33   Caeli Ridge, it's been valuable as always. And then Ridge lending group.com, or your phone number   Caeli Ridge  38:39   855-747-4343, 855-74-RIDGE, , and then to reach us an email, if that's your better mechanism to contact us info@ridgelendinggroup.com   Keith Weinhold  38:50   that's been valuable as always. Thanks so much for coming back onto the show.    Caeli Ridge  38:53   Appreciate it. Keith,   Keith Weinhold  39:00   Yeah, terrific information from Chaley. As always, if you're enamored of borrowing tax free, like a billionaire, against your real estate, they sure can help you out with that and determine whether that's right. It doesn't mean that you always should, but if you have investment ideas for debt equity, and you're attentive to cash flows, run the numbers with them and see if it's worthwhile. As far as new purchases, we all know that soured affordability has made it especially tough for first time homebuyers, and there's more data out there that shows that tenant durations are historically long, longer than they usually are. Tenants are staying in places longer because they have to. Investor purchases have stayed strong, though investors have been buying about the same proportion of single family homes and making them rentals that they have historically and Redfin tells us that. The value of properties that investors have purchased is up more than 6% year over year, so investors are still buying and that makes sense. We're in this era where there's more uncertainty than usual, there's higher stock volatility than usual, and more people are sort of asking themselves, where would I get a better return than on income property, and where would my return be more stable today than in income property as well? If you work with Ridge lending group for a time, you're probably going to understand why I personally use them for my own loans. You'll notice that they really understand what investors need. Thanks to Caeli Ridge today and thank you for being here too. But as always, you weren't here for me. You were here for you until next week. I'm your host. Keith Weinhold, don't quit your Daydream.   Speaker 3  40:56   Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  41:20   You know, whenever you want the best written real estate and finance info, oh, geez, today's experience limits your free articles access, and it's got paywalls and pop ups and push notifications and cookies disclaimers. It's not so great. So then it's vital to place nice, clean, free content into your hands that adds no hype value to your life. That's why this is the golden age of quality newsletters. And I write every word of ours myself. It's got a dash of humor, and it's to the point because even the word abbreviation is too long, my letter usually takes less than three minutes to read, and when you start the letter, you also get my one hour fast real estate video. Course, it's all completely free. It's called the Don't quit your Daydream letter. It wires your mind for wealth, and it couldn't be easier for you to get it right now. Just text. GRE to 66866, while it's on your mind, take a moment to do it right now. Text GRE to 66866   The preceding program was brought to you by your home for wealth, building, get rich education.com.    

Episode 109 - Real Estate Exam Questions: Closing the Transaction Going through state exam questions to help real estate students pass their state exam.   Happy New Year! 3 Year Anniversary of A-Ha! REEP. YAY!!! Don't be entitled in life, in real estate, or with me. Ha ha!! List of recent grads: Joseph, Alejandro, Madiera, Tylar, Travis, Douglas, Zack, Christi, Alan, Patricia, Devon, Trudy, Rhonda, Wanda, Daniella, Cecilia, Maisy, Lena, Ruth, Melody, Sadie, Ryan, Tomeka, Scott, Christina, Chris, Jessica, Jeffery, and Hayley.   Listener messages: Jeffrey from Indiana and Hayley from Upstate New York Closing events and types                                                                                         Conducting the closing RESPA – Real Estate Settlement and Procedures Act ABA – Affiliated Business Arrangement TRID – TILA RESPA Integrated Disclosure rule; Truth in Lending Loan Estimate and Closing Disclosure forms Kickbacks, referral fees, and rebates Debit and Credit Prepaid and Accrued expense prorations Banker's Year vs. Actual calendar days Math Transfer stamps, excise tax, revenue stamps, deed tax, etc. Exam Questions   Go to www.ahareep.com and sign up for the program for only $35, use discount code: legend15 to save 15% off.   Go to www.indianarealestateinstitute.com for Indiana real estate classes.   A-Ha LINKS   Email info@ahareep.com   Web www.ahareep.com   Facebook https://www.facebook.com/AHA.REEP   YouTube https://www.youtube.com/channel/UCrxAjI5Li4Ll3Epwcyc0i6A

You can get financially free twice as fast with the BRRRR Strategy instead of buy-and-hold. But it's less passive. BRRRR stands for: Buy, Rehabilitate, Rent, Refinance, and Repeat.  You can get an infinite return this way, by generating yield with none of your own money left in the deal. Learn how to obtain BRRRR financing from Caeli Ridge, President of Ridge Lending Group. The LTVs are 70%, 75%, or 80% depending on the property and financing type. RidgeLendingGroup.com specializes in helping investors buy income property. Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. The real estate BRRRR strategy is a shortcut to growing your wealth. But it's less passive than buy and hold with a property manager. Learn what is the Burr strategy and then about some of its pros and cons, mistakes you must avoid and financing programs available, and how it can generate infinite returns for you today and get rich. Education.   Robert Syslo (00:00:28) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.   Robert Syslo (00:01:02) - Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:13) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:30) - Welcome from Bridgeport, Connecticut, to Bridgeport, Texas, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education. Let's Do Good in the world and abolish the term slumlord profiting at the same time by providing housing to others. It's clean, safe, affordable and functional. This is where, you know, on this show, we often tell you how to become financially free through real estate investing in the next 5 to 10 years without having to be a landlord or flipper. We're going to talk about how to shorten that timeline in a moment, but I have a couple resources to share with you. First, one, late breaking development at GRI marketplace that's been popular is in Florida with new builds, brand new construction for plex's duplexes and single family rentals with points paid a 4.25% mortgage rate.   Keith Weinhold (00:02:28) - Yes, 4.25%. You can pay fewer points and still get a 4.75% rate. Also, some good low interest rate deals for foreign nationals. Go ahead and connect with a great investment coach and learn about those at great marketplace.com. For a 4.25% mortgage rate. If you're a Spanish speaker or have Spanish speaking friends, check out get Rich education.com/espanol to see my free video course on how real estate pays five ways in Spanish. It's pretty interesting how our team here has applied AI to show me speak it in Spanish. Again, you can see that at get Rich education. Com slash espanol. Now the BR real estate investing strategy is popular because it can reduce your out-of-pocket expense for property substantially. Let's break it down here. That is the b are are are are. There are four hours after the B which stands for the first B is buy. You buy a distressed property that needs to be fixed up. Then the R's stand for rehab, then rent, then refinance at that higher value, then repeat. More of you have been buying BR property through GRE marketplace.   Keith Weinhold (00:03:52) - Yes, we help you find not just buy and hold properties here, but properties optimized for the BR as well. There are properties that need some work and they are not turnkey, not ready to go with little or no money. In less than three years, you can have a portfolio of 10 to 20 properties with the BR strategy. That's a shortcut, but that does take some work. It's less passive. You're buying distressed property that needs to be fixed up, and you have to be sure that the contractor is getting the work done on time, on budget, and of adequate quality standards. And vetting contractors and dealing with contractors is not easy. I'm going to have a few tips to help you deal with that today, but if you get it dialed in, BR lets you pursue an infinite return strategy where you buy property at a low price, renovated, get it rented, and then refinance it at the higher value. And at times you can get all of your invested cash out on that refinance.   Keith Weinhold (00:05:04) - Well, because a return on investment formula is simply your dollars returned divided by the cash that you have invested in the deal. Well, therefore, if you have no money left in the deal anymore, your return is infinite. Listen carefully. If our guest doesn't do it, then what I'll do is introduce an example here in our conversation for you to get you to help understand the BR. And if this is new to you, this will stretch your thinking somewhat. And then after our break, I'm going to come back and we'll discuss more about any changes to conventional loans for buy and hold investment property. And there's one place that's created more financial freedom through real estate than any other lender in the entire nation. It's time for a big welcome back to their leader, Charlie Rich.   Caeli Ridge (00:06:02) - Hey, Keith. Thank you for having me. It's always a pleasure to be here.   Keith Weinhold (00:06:05) - Well, you know who she is by now. She leads Ridge Lending Group. They're an investor centric lender, and she does such a good, concise job of explaining what real estate investors need to know in optimizing your loan positions.   Keith Weinhold (00:06:18) - And that's why she's here with us again. And, Charlie, rather than just learn about conventional buy and hold loans or refinance loans like we've covered in the past, let's talk about lending for the BR real estate investing method. BR is a method for buying distressed property at a discount. So not turnkey, not fixed up property. Here in BR stands for buy, rehab, rent, refinance and repeat. Now for these loans. Is the lender looking more I guess Charlie maybe we should start with are they looking at the property strength or more at the borrower strength for BR loans?   Caeli Ridge (00:06:54) - Well, first of all, I would say that BR is one of my favorite strategies for real estate investors, especially if they're getting into diversifying their portfolio. I think BR is a very lucrative way to achieve the returns that people are after, not only in appreciation but also in cash flow. You can get some really great leverage in these ROI and ends up being better if you find the right properties. So I'm a big fan of the BR, but to your question, Keith, it depends on what product they're going to elicit for the end loan, for that refinance loan, if we're talking about a conventional loan, Fannie, Freddie and the qualifications are still about the individual and their debt to income ratios, etc. if we're going to put this on a debt service coverage ratio, which it can apply to both, or can, I mean, the strategy does not obligate them to one or the other.   Caeli Ridge (00:07:39) - So we can go conventional where it's still going to be about the individual. Or we can look at more of a debt service coverage ratio, where it's about the income of the property in relation to the mortgage payment.   Keith Weinhold (00:07:48) - And before we go on, of course, identifying a deal is a key here in the BR strategy. Is there any guidance you'd give with identification of that property. Because you might know more from the lender perspective on what's going to be lendable.   Caeli Ridge (00:08:03) - Well, as long as it's habitable, we can lend on it. I would say that you really want to pay close attention to a couple of things. From a lender's perspective, the ARV, right? The after rehab after repair value is the linchpin to all of this. And if you're out there getting your comps from whatever sources, the agent or Zillow or Redfin or whatever it is, the more data that you can gather, the better. But just keep in mind that the ones and zeros that you're probably gaining access to don't necessarily have the components that show all the rehab work that you're putting into it.   Caeli Ridge (00:08:34) - So if you're getting a value of a property like kind property in the area or vicinity that the property is located, it's not always going to attest to what extras you put in, whether it be the hardwoods or square footage or whatever it may be. Just keep in mind that you may not be on point there, and real estate agents, I would want you to have or be working with one that really understands the BR method, aka investor models, to make sure that you don't get caught in a scenario where you're expecting a value of x that comes in at Y, that can be very devastating to the BR methodology, especially for new investors.   Keith Weinhold (00:09:09) - It was more about coming up with the ARV because with a conventional loan on a conforming property, that value that you're lending against is typically the appraisal.   Caeli Ridge (00:09:21) - Correct. And the appraisal is going to take into consideration those rehab pieces. But it's not dollar for dollar. And while I don't know that we want to go down the appraisal rabbit hole, I will tell you that if you've got $50,000 of rehab into the property, that doesn't necessarily mean you're going to get a full 50,000 in extra value.   Caeli Ridge (00:09:38) - A lot of it has to do with what you paid for it. Like Keith, you said at the top of the podcast here, distressed property. A lot of times when people are getting into BR, they're finding under market value property to begin with, that's already worth more. They're putting in some real value adds, maybe cosmetic, maybe a little bit more, and then expecting quite a bit more in value. So there's definitely a science to it. But just make sure that for all intents and purposes, you're gathering as much data as you can. And the agent, if you're using a real estate agent to help with MLS listings, etc., that they have some basis of background within this, this particular philosophy.   Keith Weinhold (00:10:12) - Okay, so we are projecting an RV in after repair value here, and then we need to lend against a percentage of a certain value. So clearly since in this case the property is distressed, well then if the property is the lender's collateral and that collateral is a little, you know, why don't we call it damaged, if you will? Well, then I'm going to speculate that is that lender probably not going to give you as favorable loan terms as they would on a conforming property.   Keith Weinhold (00:10:39) - So tell us more about how those bur loan terms look.   Caeli Ridge (00:10:42) - So you might be surprised. Again, as long as the property is habitable the LTV is going to be the same. The value of the property. It is probably what you're going to notice more than what the lending side is going to allow for in the loan to value. So on a single family residence, if it's habitable, we're going to give the individual up to 75% of that ARV. Now, I don't know if we're ready to go down this road. I think we should talk about it at some point. The ARV and how we want to maximize and not leave any money on the table. We want to discuss the purchase price and the acquisition. I think we'll come to that. But to answer your question, habitable 75% single family or 70% on a 2 to 4 unit is going to be the maximum loan to value using the appraisal. When we talk about a cash out refinance of an investment property, which may be different if we get into a rate and term refinance as a purpose of Bur, which will probably touch on as well.   Keith Weinhold (00:11:36) - What I think for the listener benefit here, maybe it's good to jump into an example if you want to apply some real numbers here to a bird deal, and then let's walk through that with the financing and more.   Caeli Ridge (00:11:48) - Let's start with cash out, because it is different than a rate and term. So cash out simply to clarify means that the individual is going to get cash in hand. We are not simply paying off an existing hard money loan. That is a rate and term refinance. So we want to start with cash out where the cash to acquire the property was the individual sourced and seasoned funds. And let's assume that the scenario looks like this. They paid $100,000 for the property. And then there's $50,000 in renovation with the expectation. Or let's just say that we get an appraisal for 200,000. So at 200,000 and it's a single family residence, 75% of that is 150,000. Okay. So that pretty much covers their total acquisition costs. But then we've got a recommendation.   Keith Weinhold (00:12:28) - Cost is quite.   Caeli Ridge (00:12:29) - Covered. But we have to account for closing costs tax and insurance.   Caeli Ridge (00:12:31) - Let's just make it around ten grand. So the individual is going to end up with 140,000 from their 150 total acquisition cost. If you divide those two numbers, you're probably going to be at what? So 140 divided by 150,000. Yeah, 93% overall leverage. You've got ten grand skin in the game. And when you look at it from that perspective, 93% over all loan to value or leverage of this property is very, very high. If you can get a deal to work like that, you're doing very well.   Keith Weinhold (00:12:59) - And you can see why people like this and why people are attracted to this. So go ahead and tell us more about this. Because really, when we talk about lending for a bigger property, we're probably talking about two different loans, right? We're talking about the purchase price upfront and then the refinancing later on.   Caeli Ridge (00:13:17) - Right. So let's going back to my example. If you paid cash for the property, if that 150,000 was your sourced in season funds. And if you want Keith tell me later and I'll go into what source and season it is.   Caeli Ridge (00:13:28) - But you have 150,000 in on this property. The key to getting up to the maximum of 150 back. Or in our example, you ended up with 140 back because we accounted for ten grand. And in closing, cost is to make sure this is wildly important. And a lot of people get this wrong the first time they go down the Burr road. Make sure both the purchase price and the acquisition costs are listed on your final CD, aka Closing Disclosure. A closing disclosure comes to you at closing, where it's a document, a form that illustrates all of the line item pluses and minuses of the buyer and the seller and what everybody netted at the end. The CD must have the total 150 listed on there, and just one number is fine. It can be broken up into two numbers, whatever. But as long as both numbers are listed on the CD, you as the borrower, our client, her guidelines are eligible to get up to that much back. So the guideline states that the individual cash in hand cannot exceed a maximum of what the total acquisition costs listed on that CD is.   Caeli Ridge (00:14:28) - So what the common mistake is, let's just keep using our 100,000 purchase in our $50,000 renovation. The common mistake that people make is, is that they pay the 100,000, the seller is made whole. And then the day after closing, they are officially now the owner of this property. They send the 50,000 out to the contractor. Seems obvious, right? Well, in doing it that way, you've left 50,000 on the table and now you're going to have to wait 12 months per new guideline to have 12 months of ownership, seasoned ownership for Fannie Freddie to get the total 150. So make sure that the total 150 is on that CD. And the way to do this, just one more little detail. You want to be working with an escrow company that provides something called an escrow hold back. Because a lot of times when I give this advice, people say, well, I don't really want to release $50,000 to the contractor before they even started any of the work, right? That makes sense to me.   Caeli Ridge (00:15:16) - And most escrow companies do this in escrow. Hold back says that the hundred grand goes to the seller. The 50,000 is earmarked for the general contract, you've gotten your bids, etc., but the escrow company will then deliver the 50,000 upon your approval as draws to the contractor as work is being completed. And that kind of absolves that extra layer of risk. But now you've done the appropriate thing for the financing to get maximize your cash out, and you're not leaving yourself in a weird position to frontload 50 grand before you know they've even started on whatever repairs there are.   Keith Weinhold (00:15:49) - Yes. How much motivation does every contractor have if they've already got their 50 K for 50 K worth of work before they do their work? And it works this way a lot in the contracting world, where progress payments are made intermittently as the contractor performs their work. So tell us more about what we need to know here. Clearly, especially when it comes to the Bir and loans, because you just gave us a great mistake to avoid there.   Caeli Ridge (00:16:13) - Kind of keeping on that theme. And then let's talk about a rate and term refinance. You know, some of the pushback that I'll get when I have these conversations. Well, you get your bids. Okay. We'll start talking about the 50,000 renovation per hour example. And you probably get a low and a high and middle. Maybe you go with the middle. It's been my experience personally and just through conversations that the bid is 50,000. If you don't have the upfront conversation to say, I'm not going to pay a cent over the 50,000 and or you negotiate to say, okay, what is our variance here? Because a lot of times the contractor is not going to be pigeonholed to 50,000. They're going back and say, no, I'm not going to sign anything that says that it will not exceed 50,000. There are costs and things that are out of my control, blah, blah, blah. Then coming up with, okay, fine, 55,000, 50, 2000, whatever that margin might be, including that in there and then having the conversation that says, okay, fine, because you don't want to leave that money on the table.   Caeli Ridge (00:17:03) - So let me take a step back. 50,000 becomes 55,000. And if you didn't have it on the CD, that $5,000 is not eligible to get back. So if you increase the amount that's on that CD, per the conversation with your contractor, make sure one of two things that if it isn't spent, that it's coming back to you and assuming if it is, then everybody is on the same page and it's just going to be part of the expense and part of what you have potential to get back. So just food for thought there. Then moving into the rate and term refinance. Now this is something totally different. This means that you went out and got a hard money lump, some kind of a private bridge loan, which by the way, Ridge does. We have bridge loans that can help fund the purchase and the renovation. We can talk about that if you like. But if you went out and got a hard money loan, this is no longer a cash out refinance unless the value is so high that based on a 75% LTV for cash out, that there's enough money on the table that you don't want to wait the 12 months.   Caeli Ridge (00:18:00) - I'm going to pause on that for a second and just say that the numbers work for a rate and term refinance, where we have an existing loan. Let's say you've got a hard money loan for 150,000. A rate and term refinance lets us go to 80% loan to value on a single family, 75 on a 2 to 4. If you recall a minute ago it was 75 and 70. That's cash out. Refinance rate and term refinance rules when you're not getting any money in hand, were simply paying off existing liens plus closing costs. They increase the LTV allowances. So 75 2 to 480% on a single family residence. So if we can go 80% on the 200,000, what is that one? I can't do mental math, Keith. So 80% of 200,000 is 160. So in that case think about this. So let's just keep going back to our example. You've got 150 into it. We've got 10,000 of closing costs okay. 150 is a hard money loan that we have to pay off. And the 10,000 is what the new refinance closing costs are going to be.   Caeli Ridge (00:19:00) - The value came in at 200,000. 80% of that is 160,000. That's no skin in the game. You have completely covered the hard money loan paid for the closing costs. I mean, you can't get better than that. That's 100% leverage, right? You're not getting cash back. Now let's take that and say that the value came in at 250. And that's a lot of money. In that case, you may want to wait for the 12 months to get that cash back, because you're going to be limited if you use leverage to acquire the property versus your own cash, that's when you're going to have to wait that 12 months. Or if you're cash acquisition, the numbers work out where you'd get an exponentially more amount than what you put into it. You may want to wait there, too. It really just depends on what that RV is going to be. That's why it's the linchpin that'll make you decide whether you're going to wait the 12 months, or if you're ready to rock in in the immediate terms with a rate and term refi.   Caeli Ridge (00:19:53) - No seasoning. If you're not getting cash back, I don't care. We can do it immediately or a cash out refinance. As long as you're not getting more back than what you paid for it. And we can show that the dollars to acquire all in the CD and they came from, you know, seasoning.   Keith Weinhold (00:20:07) - All right. So it's the BR strategy with the cash out refinance and then the burr strategy with the rate and term terms there, if you will. Is there anything else that we need to know about either one of those.   Caeli Ridge (00:20:19) - Really a lot of people always want to say what are the rate differences? And I would say that, you know, overall they're going to be roughly the same when we start talking about those LP's. Again, Keith, low level price adjustments there, pluses and minuses that have to do with risk. A cash out is a higher risk than a rate and term, a rate and term at 80% versus a cash out at 75% might offset that. So relatively speaking, they're probably going to be within an eighth to a quarter percentage point if all the other variables are equal.   Keith Weinhold (00:20:44) - Now, clearly, I think of a hard money loan is something that allows. You to put both the purchase price of a property and the projected rehab cost, and roll those all into the loan at closing. That's what I think of as a hard money loan. Is there any difference between a hard money loan and the other things that you're describing to us?   Caeli Ridge (00:21:04) - Not really. I mean, it's probably a cat of a different name, right? I mean, a hard money loan, a private money loan, a portfolio loan, a bridge loan. I mean, you could use the same thing, depending on the context of the sentence, to mean the same thing, maybe something different. You're probably right in this context. It's going to be the same, I think.   Keith Weinhold (00:21:21) - Well, I want to talk to you more about conventional loans and any mortgage industry trends that have been taking place lately. But before we do, do you have any last thing to tell us about the Burr strategy, where really someone can accumulate maybe 10 or 20 properties in just three years with little or no money, but more work?   Caeli Ridge (00:21:39) - Yeah, a little bit more work.   Caeli Ridge (00:21:40) - I would say get to know your market, have your team. That contractor. Man, I think you alluded to this. I think that that's the piece that most people struggle with is finding the right contractor for one of the things that tends to work well, if you have established a relationship, is kind of getting in with some kind of a JV with the contractor, right? They've got skin in the game. Maybe if your numbers work out, they get a 5% bonus on the end, whatever. Just to kind of not keep them honest but keep them honest, if you know what I mean. So making sure you've got a good contractor that you can trust if you're going to be doing this out of state from where you live, even more so, doubly so you really want to have the right team. And that includes the general contractor, the escrow company, your lender. Everybody's got to kind of be on the same page if you're going to continue to do this as a rinse and repeat.   Caeli Ridge (00:22:23) - And then finally I would say bring it to Ridge. Let's just make sure if you're new to doing this, I want to make sure you're not leaving that money on the table, that we're structuring it appropriately so that we're maximizing the loan to value, we're maximizing your dollar, and that you're not leaving money or leaving money for some period of time longer than what you would have wanted to, because this is a rinse and repeat, right? If you don't do it right the first time, you could be stuck tying up 30 grand for 12 months that you would have otherwise been able to capitalize on. If we looked at it in advance of you pulling a trigger.   Keith Weinhold (00:22:52) - Yeah, that's correct. In fact, that last R in the BR strategy is to repeat it. And yet, to your point about contractors, I like to think about what contractor motivations are and what my motivations are. And in times I have incentivized contractors with giving them a 5% bonus if they finish things ahead of schedule or a 5% penalty if they finish things behind schedule and putting that in the contract as well.   Keith Weinhold (00:23:14) - You're listening to get versus a case. We're talking with Ridge Landing President Charlie Ridge about getting loans for the BR strategy more when we come back. I'm your host, Keith Windhoek. Role. Under this specific expert with income property, you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your prequalification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love.   Keith Weinhold (00:24:29) - How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 5 (00:25:06) - This is our Rich dad, Poor dad author Robert Kiyosaki. Listen to get Rich education with Keith Wayne. All scripture data.   Keith Weinhold (00:25:25) - Hey. Welcome back. You're inside. Episode 502 of gray. I'm your host, Keith. Y'know, we're talking with the president of Ridge Lending Group, Charlie Ridge. She talked to us before the break about her financing strategies and the things that you need to keep in mind in order to optimize your returns there. It's only now back here on the conventional side, we talk more about conforming loans for properties that are already fixed up.   Keith Weinhold (00:25:48) - Or maybe people call those turnkey. What about some of those hurdles that investors often have in there? For example, I know that the DTI one exceeding their debt to income ratio threshold when they try to qualify is sometimes a problem. So can you talk to us about some strategies with that? For example, sometimes a person might have a $500 a month car payment, but they only have four or more payments to make for their $2,000 principal balance. And it just makes more sense to pay that off. And then that drops off the DTI calculation. Are there any other thoughts you have with regard to that?   Caeli Ridge (00:26:18) - There's so many in this. I mean, we probably have our own episode for all different ways on debt to income ratio and to move that needle. Just to go back to your example, just FYI, if the car loan is financed, not leased, and there are ten months or left reporting on the credit report automatically per guideline we had, we can exclude that if it was at least with ten months or less, we have to keep it in the ratio.   Caeli Ridge (00:26:39) - But if it's a finance car, ten months are left are showing on the report. It's automatically reduced from the liability section of DTI. The other things that we're to look at just obvious things. Can we gross up any kind of income. Right. Are there bonuses or commissions or Social Security or veterans benefits or whatever that allow us to gross those up, making sure that we've got all of the applicable income that they gather? Sometimes people will forget to say, oh, I get this. You know, child support or alimony or whatever it may be that I didn't think to disclose. We want to make sure that we have that in there. And then we talk about liabilities we want to look at here's kind of a good one. Student loans let's say that either cosigned or you have your own student loans. Fannie and Freddie have different. And maybe they're in deferment. Okay. So when we pull the credit it shows zero as the monthly payment. While Fannie and Freddie have different rules about what we have to hit them for.   Caeli Ridge (00:27:25) - And I could be getting these backwards, but I think that Fannie is 1% of the outstanding balance, whereas Freddie is a half a percent. So depending on some other variables, we may elect to say, okay, DTI is really tight, we're going to take this and make this one of Freddie, assuming that they fit all the other boxes so that we're only having to hit them for that half a percent. Otherwise we look at maybe paying off revolving debt, get those payments down if they're small enough, maybe there's a $3,000 balance that has a $300 payment that's really screwing things up, and they can afford to pay that off. So certainly we can look at those kinds of things, adding in a co-borrower, putting more money down, buying the interest rate down, maybe finding slightly cheaper insurance, right. At least for the purpose of the loan. And then if you wanted to get higher insurance or lower deductibles or higher deductibles later, you could certainly do that. So there's so many different variables that we can look at to really it's not a one size fits all.   Caeli Ridge (00:28:13) - And DTI is kind of a slippery slope. And there's lots of different ways in which we can get that down into check. And if it doesn't happen today, we can help them plant the seeds for what to do tomorrow and making sure that we get them there.   Keith Weinhold (00:28:24) - Wow, that was fantastic. I hope you, the listener, are listening closely because Charlie just gave so much packed, nutrient dense information about what you can do with your DTI. And for starters, I think a lot of people think about reducing their debt to improve their DTI. But is all your income being credited as well? Hopefully you caught that part which said that. But when it does come to reducing the debt portion, of course student loans have very much been in the news with all these plans for forgiveness. Is that impacting DTI substantially?   Caeli Ridge (00:28:53) - If they had the right documentation? Sure. Yeah. If they're on there and we have the right documentation that shows that they are forgiven, but they just haven't caught up with the system, then absolutely.   Caeli Ridge (00:29:00) - Otherwise, if they don't have the supporting doc, the letter that says and it's on the credit report, we're going to have to hit them for it, whether there's a payment there or a zero deferred. And then we have to figure out the 5.5 or the 1%. It'll have to be in there. Just depends on what they can deliver in terms of that forgiveness in paper trail.   Keith Weinhold (00:29:18) - You do with mortgages every day in there. That's what you specialize in for investors. Are there any just overall mortgage industry trends that really specifically impact real estate investors that have occurred? Or amid.   Caeli Ridge (00:29:31) - The rates? Everything is going to come back to the rates. As much as I impress upon people, it really shouldn't be about the rate. And I understand the psychology. Listen. But if they're not doing the math, they're really doing themselves and their future investment a disservice. The shelf life, you guys of an investment property mortgage is five years. Whatever the rates are today, you're not going to have that interest rate almost certainly in 5 to 7 years.   Caeli Ridge (00:29:54) - So kind of looking down the forecast of where rates we think they're going to go, the appreciation of the property, harvesting equity, pulling cash out. Keep those things in mind when you fixate on the interest rates. I would say that that's usually what it's top of people's minds. The most recent inflationary data came out. It was hotter than we expected. However, shortly thereafter, if you're watching closely the unemployment rate and the jobs report, I think it offered 175,000 new jobs and the projection was to something. So that's good news. And listen, you guys, you can't have it both ways. We're in a hot economy. I guess it depends on who you're talking to and who you're asking. I understand, but for all intents and purposes we've got inflation is is down. It's not down where the Fed's wanted that 2%. The unemployment rate is very, very low. So in that regard we're doing very well. So interest rates are going to be higher. Unfortunately it balances this way. The worse the economy does the better the interest rates do.   Caeli Ridge (00:30:48) - Finding that equal balance I think is the key. And don't ask me, I'm not going to try and predict how to do that. But do your mouth be prepared for refinancing when it comes. Sitting on the fence is usually not going to be to your advantage if you're waiting for interest rates to come down, and that coupled with house values, come down a little bit too. And you may have played yourself out of the refinance anyway for the purposes that you wanted to pull cash out. So just be educated. Call us. We can kind of walk you through some of that stuff. Interest rates, I think, are going to be higher for longer unless we see some real significant data trends, because there's a lag. And what we get from the Fed's and I think they try to put that in there, but who knows what's going to happen. What are they going to see us again June, July. We'll see what happens. If jobs reports keep being light, then maybe we start to see a little bit more reprieve in the interest rates.   Caeli Ridge (00:31:32) - But we're still we're what, seven and a quarter, seven and a half for investment property I think in most cases. So if that's too high to cash flow, find a short term rental. Find a mid term rental. There's other ways in which to accomplish your variety of variables. Even in the seven and 7.5% interest rate environment.   Keith Weinhold (00:31:49) - Well, there's so much I can say about the fed and the interest rates, but I think you said something very important earlier that the average shelf life of a mortgage loan product is about five years. It's exceedingly few people. Well, less than 1%. They're making their 360th monthly payment ever at a 30 year fixed rate loan. Charlie, I want to ask you what. Maybe it's becoming sort of known as the Charlie Ridge question. I like to ask you this almost every time that you're on the show, because it gives us a temperature of the market, because you see so many loans and so many appraisals come in there, what percent of appraisals are coming in above value? What percent are coming in on value, and what percent of appraisals are coming in below value?   Caeli Ridge (00:32:26) - We don't see as many low values.   Caeli Ridge (00:32:28) - I think that there was a period of time where that was rampant. It was really frustrating for a lot of people, especially on the Non-owner occupied side. The vast majority are coming in on point, and I think a lot of that has to do with 0809 regulation. Appraisers are kind of scared of their own shadow and overvaluing properties. So I think that they do very everything they can to hit the mark. And I don't see too much over an occasion. We'll see a little bit over. It's more likely to see it over than under these days. I would say, okay, percentages under 10% on the mark 8075 and then over. We'll give it.   Keith Weinhold (00:33:03) - 1515. Okay, a few more over than under, but pretty close to right on value there. You do loans in almost all 50 states. And these are the states where the property is located, not where the borrower lives. Right. So it's every state except a few.   Caeli Ridge (00:33:20) - Right? We're not in North Dakota and we are not in New York.   Caeli Ridge (00:33:22) - Otherwise we are lending in all 48 states where the property is. That is correct.   Keith Weinhold (00:33:27) - Yeah. And you specialize in loans for investors. Like I said earlier, what other loan types do you offer investors and others in there because you do a few primary residence loans too.   Caeli Ridge (00:33:38) - We do lots of primary. I would say, you know, it's 7030 probably. We're very capable, full service direct lender. What that means is we fund on our warehouse line, we underwrite in house, but we don't service these loans. So we bundle them up in mortgage backed securities and we resell them on the secondary market to aggregators. You guys will know this as servicers. Any Mac, Wells Fargo, whoever is going to be the end servicer of the loan. And I've worked really, really hard to create an environment specifically for investors, not exclusively, but largely so that we're not a one size fits all. So I really appreciate the question and being able to articulate to your listeners, we really do everything. It's very uncommon that we don't have a loan product to feed the actual need.   Caeli Ridge (00:34:17) - The one thing that I would say we don't have or don't offer is going to be a lot bear lot loans we don't fund on just bare land, but we can do the Fannie Freddie's bridge loans. So for the fix and flip or fix and hold the BR, we do non QM. This is just non QM is kind of everything outside the Fannie Freddie box. If you can't quite fit into the rigors of Fannie Freddie you're going to be in non QM probably where debt service coverage ratio lives. Bank statement loans live, asset depletion loans live. We have commercial loan products for commercial properties. For residential properties we have. Ground up construction. First line Helocs for relationship clients we have second line Helocs. We had second line for everybody when we pulled back just for relationship clients for reasons that we'll discuss on one on one if anybody's interested in that. What am I forgetting, Keith? You get the point. There's a lot. If you think that you're trying to get financing for residential or commercial properties, please email us and we'll take some information to let you know what we can do.   Keith Weinhold (00:35:10) - Well, yeah, to my point, you provide such a great service in a wide palette of options. It's somewhat easier to describe what you don't do. Yeah. And what you do offer to people. And of course, I've done my own loans in there at Ridge and my own refinancings in there. And yes, I usually end up getting a servicer. That's one of the big banks that you've always heard of over the long term that I make payments to. Where does one get started to get things rolling with Ridge or just to ask some questions.   Caeli Ridge (00:35:36) - Call us 855747434385574. Ridge, you'll get someone immediately. We don't have any call trees. You'll speak to me if I'm available at the time. Our website's got a lot of great information. Ridge lending group.com email info at Ridge Lending group.com. All of those ways will get you on the books with me, if that's what you like. Or assign you to a loan officer in the company. And we look forward to serving you.   Keith Weinhold (00:36:00) - You have given our longtime listeners more good, timely mortgage information than anyone in the history of the show here, and we're all better for it.   Keith Weinhold (00:36:09) - Charlie Ridge, thanks so much for coming back on to the show.   Caeli Ridge (00:36:11) - Thank you Keith.   Keith Weinhold (00:36:18) - Let's review some of what you learned about Bir and their loans today. Once your property is renovated and rented, which are the first and second are the third are. Is refinance for a cash out refinance type? It is a maximum of 75% loan to value on single family and 70% on a 2 to 4 unit, and then for a rate and term refinance, which means when you don't get any money in hand after closing and you're simply paying off existing liens plus closing costs, it's 80% loan to value on single family and 75% on a 2 to 4 unit. And you learn to be sure that both the purchase price and the acquisition cost are listed on your final closing disclosure. You know what I think is interesting with originating mortgage loans today? Overall, it's one question that I've been thinking about, and maybe we'll do a poll on this question. If we do, I'll share the results with you. And that is, do people care more about the mortgage interest rate than the purchase price of the property itself? Sometimes it seems that way to me.   Keith Weinhold (00:37:29) - Now your mortgage rate definitely matters, but not as much as the purchase price. I mean, later months or years down the road. After you purchase a property, you can often renegotiate the mortgage interest rate, like if rates fall, but your purchase price stays fixed, that part never gets renegotiated. And like I mentioned last week, low mortgage rates don't create wealth. Leverage does. And to put a finer point on that, consider that in 1971, the mortgage interest rate was 7.3%. Back there in 1971, if you had waited for interest rates to go down, you wouldn't have purchased a home or an income property until 1993. You would have waited 22 years for rates to go down. And meanwhile the price of real estate quadrupled, and many people expect mortgage rates to stay higher, longer. Whether you're interested in the BR strategy or already renovated income, property or even primary residence loans, I invite you. You can get loans at the same place that I have myself for years. That's it.   Keith Weinhold (00:38:41) - Ridge lending group.com. Until next week. I'm your host, Keith Winfield. Don't quit your day dream.   Speaker 6 (00:38:52) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:39:20) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Well, it's almost here. You have negotiated that house that you always wanted, you have done the inspections. You have negotiated the inspections. And now you are getting ready for closing… But wait! What is this document that has all these numbers and figures on it. They used to call it a HUD? You don't understand. And what do all these numbers mean. There is some terms and terminology that doesn't make sense. And why is this money going to these certain line items? It's all so confusing. In the next two episodes of Real Estate Right Now Senior Mortgage Loan Officer with Townebank Chris Coy helps us understand the[...]

In this episode we talk about what's likely the most complex and most important part of the homebuying process. Topics covered include: The legal paperwork you'll need to review and sign before buying a new home. The information that needs to be disclosed to you before a sale. The mindset a homebuyer should have when approaching disclosure documents. The different types of disclosures – such as the Real Estate Transfer Disclosure Statement (TDS), Mello-Roose Districts, Bond Assessments, Natural Hazard Disclosures. The other reports homebuyers will receive – such as the Preliminary Title report and a public report. The financing paperwork you'll receive – such as the Loan Estimate and Closing Disclosure. Our Guest: Kevin Burke, Licensed Real Estate Broker and teacher of Real Property Law

Real Estate Attorney Bryan Jeansonne explains the residential real estate Closing Disclosure (CD). #CloseEasy   Hosted by Bryan Jeansonne, founder and owner of Lakeland Title, find him on twitter @bjeansonne, Instagram @bgjeansonne   Find us on twitter @LakelandTitleBR, Instagram @LakelandTitleBR and Facebook.com/BRclosing   Watch this episode on YouTube here: https://youtu.be/wuYCBCf2PNo

The Closing Disclosure can be confusing at first glance. It is an overview of your final home loan costs - including your closing costs. This important document should be read thoroughly to ensure that you fully understand the costs associated with your new home loan. The closing disclosure includes explanations for costs, such as - closing costs, loan fees, interest rate, real estate taxes, home purchase price, and other costs regarding your loan.  In this episode, mortgage expert Ivan Simental NMLS# 1762746 goes into detail about the Closing Disclosure, why you should take the time to read it, what it means, what's listed, and what happens after it's signed. The Mortgage Reports Podcast is operated by Full Beaker, inc. NMLS# 1019791Learn more about home buying, refinancing, and real estate investing at themortgagereports.com

Learn the latest on sophisticated schemes targeting businesses like yours and what you can do to protect yourself. Melissa Jay Murphy 00:06 Hello, everyone, welcome to the Title Now Pop-up webinar. I'm Melissa Murphy with The Fund and I am relaunching these webinars after taking a fairly significant break. So, thank you for tuning in. Because it's been several months since I hosted a webinar, I thought that I would make sure that all of you know we also have a podcast I feel very modern and with it. The podcast is also called Title Now and I generally push the audio from these webinars to the podcast and will be doing that with today's presentation. The podcast is available through all of the typical channels so sign up and take advantage of all the great content that we have in the podcast. So, what are we talking about today? We're talking about cyber fraud and why cyber fraud because it is the number one threat to our industry. It's the number one threat to your business. Despite that reality I fear that so many people in the closing business have heard about cyber fraud over and over and over again and I know I nag about cyber fraud over and over again. You've become sort of resigned to it. You've made minimal gestures toward protecting yourself perhaps setting up some procedures you've made minimal efforts to really keep up to date with what's going on out there in the world of cyber fraud. You're basically rolling the dice on whether you will be the next victim and honestly in today's market, unless you have $400,000 or $500,000 set aside in your rainy-day fund, you are really taking a chance. So, I feel like because this threat to our industry has evolved over the past year. Things have changed and in who's behind this and how they're, what their business plan is, what their workflow model is. And those changes are not good for us. The criminals have figured out that preying on our industry is pretty darn lucrative and apparently not that hard. So, I thought it was a great time to revisit this topic give you an opportunity to learn more about who is behind this crime, how they view our industry and how they have identified our weak points and how they can get in. We have two gentlemen with us today that are on the frontlines of this war and yes, it's a war. They're going to share their knowledge, expertise, and advice on what the industry and you need to understand and what you need to do to address this threat. So first, I have with me, Tom Cronkright. Tom's an attorney in Michigan, but much more importantly than that Tom is in a closing business. He has a title agency Sun Title, it's a high-volume agency, and he also has a company CertifID, that's in the business of safeguarding money in real estate deals and through this process through this life experience, Tom has become one of the real estate industry's leading experts on cyber fraud and he is committed to solving the largest problem in real estate. And he's so good at this, that the Secret Service has partnered with him. We have Steven Dougherty here from the Secret Service. And as you can see from his impressive background, he's with the Global Investigations Operation Center for the Secret Service. Tom and Steven, let's get started. What's happening in the world of cyber fraud, business email fraud? What do we need to know? Tom Cronkright 4:28 Steven, I'll let you take this but Melissa, thanks for taking the time and just spreading more and more awareness on this topic. You do such a nice job, appreciate the tee up. But Steven, why don't we read you in we've had a very very active year and a half together and as far as combating BEC, or business email compromise and wire fraud. But as Melissa mentioned, a little bit more background but I'm a wire fraud victim as well. So as an attorney, title agent, I've been through this process. Unfortunately, in 2015, it cost me nearly $200,000 and ended up in a high-profile federal trial down in Tampa. So, when Melissa mentioned that I've become a subject matter expert, I just paid a lot of tuition in this realm that these are courses I did not want to take. As a title agent or lawyer, I don't remember a cyber fraud and money laundering class in law school. I remember tax and corporations secure transactions, but that's it. Steven, you could be read the group into what we're seeing at a high level and how that starts to work its way down into the real estate. Steven Dougherty 05:40 Yes, where I sit in a very unique position here. I'm at Secret Service headquarters in Washington DC. I'm in a desk here called our business email compromised mission desk, in which my unit gets in pretty much real time aggregative incidences cyber enabled financial fraud affecting every industry. These guys are threat actors are targeting every industry out there where financial transactions are taking place. You know, every industry has it, but where's it most visible? It's most visible in the real estate sector. So, they've really turned their sights on the real estate sector for the past several years and they continue to focus on it because there's so many different transactions involved in real estate transactions. You have your closing, you have your mortgage payoff, you have your earnest money deposit. All of these things are being targeted by our threat actors, and it is driven by one thing. The intersection of what I call contemporaneous and privileged information between your buyer and seller, your real estate and closing attorney they will be the only the ones you would think would have the information like the Closing Disclosure, mortgage payoff documents, anything involving the transaction, but that gets intercepted by our bad actors. And then they weaponize that against you. To get you to redirect transfers of funds, send a payment somewhere you shouldn't stuff like that. Tom Cronkright 7:03 Steven when you say that they're visible. What do you mean that real estate transactions are uniquely visible? Steven Dougherty 07:10 Just the information is out there, due to the real estate sector types of reporting information. Tom, you know, you and I have talked about this a lot about how much of open-source information is available for us to go get or for our threat actors to go find. They can use that, piece it together and then uses that to do a very, very targeted attack. That's so specific that fools even the most complex or educated individuals to spend their money. Tom Cronkright 7:38 Yeah, what we've seen I want to layer on it mostly, if you don't mind. I went two minutes on this because I think the framework of where we are right now creates unique vulnerabilities than when I was hit in 2015 as an agent. So, if we think about the multiple listing service, all of our real estate partners that feed us deals that we're codependent on have an obligation to post up activity on the MLS. That MLS has contracts with Zillow and Trulia and a realtor typically for money to syndicate or buy that data in real time. So, what's interesting is real estate, being now the largest asset of people's lives, and there's not a close second given appreciation. I don't know if you guys saw the NICU from ALTA this morning, but home prices went up another 15% last year. That not only is that the largest asset of people's lives, it's the most visible transaction that we have in the United States. Car purchasing and other high value assets those are happening between, you know, kind of behind the curtain but not real estate. Because of the open market process that a listing agent has to conduct to get highest best use or highest best value for a property and then the fraudster just mine these deal boards. Say “Oh, looks like Norma is listing her house” and “Steve is listing his house” and listing you know, my whatever it happens to be. And then through phishing strategies, these real estate agents have the security of a dumpster essentially, on a super warm day. And they're just exposing us and I'm just going to say it because look, not every time but let's just say in most cases, and then we don't know that all the information that Steven is saying contemporaneous and privileged is being scraped and analyzed overseas, to then trick a homebuyer. And again, let's talk about homeownership right now. There is no inventory. We fell below 1 million listings last month there are more licensed real estate agents in the country than there are homes for sale for the first time that they've been tracking inventory levels. Run the math. By about a few 100,000, we have 3,800 licensed real estate agents in Greater Grand Rapids. This morning we had 900 listings. So, what does it take to buy a parked property? I've got an employee right now at CertifID. She missed out on three offers. She's been through 12 homes she was high fiving me last night almost crying in a text. “Oh my gosh, we got one right.” They’re going to do anything they can to close that. When they get to the end three weeks from now and are asked to transfer money, if they're not set up for success, that buyer anxiety and that buyer fatigue, at a time when we need them more protected, I would argue creates more vulnerability because look I'm not going through that process again. So, I'm going to do whatever you need. If you're saying I don't need to bring a check anymore and I’ve got a wire funds. Tell me where to send that wire. Steven, I think you'll agree we saw that over and over and over and continue to every week that we're involved in recovery efforts. Steven Dougherty 10:56 Yes. Talking to you touch on some really good points. So, let's talk about how these compromises are actually occurring. How are they actually getting in and getting this information out? What they do is through multiple different means either through already having your password for your email account that's already on the dark web through a data breach compromise. You guys actually go to a website Have I been pwned? https://haveibeenpwned.com They've been your email address and see if that email address was involved in any of the large-scale data breach compromises. They'll take that information, find your old password, try to use that to log into your account. That's one way to do it. Another way they'll attack is through a targeted phishing email, where they'll send you an email with a document to click on for some reason. You click on it because you think you're supposed it brings you to a web page. You type in your email address and password and boom are bad actors now your email address and password. And once they have that information, they go in and they log into your email account. They only log in one time. Generally, what they do is they'll go to your settings, and they'll set up an email rule to auto forward out any email you receive. So, you get an email from your client or homebuyer saying, “Hey, I've been told to close yeah, these are the details I have. What do you have?” Now our threat actor has all that information. That's how they get it. They only log in once, they setup the email rule, and the emails are built around that. Melissa Jay Murphy 12:29 Steven, I'd had a question on the chat for you. Oh, Tom already responded to the question. He is spot on. So, we have put in the chat the website that you go to see whether or not your email has been compromised and is out there on the dark web. https://haveibeenpwned.com So that's all. Steven Dougherty 12:50 Yeah, essentially, essentially, it's a website that conglomerates a bunch of different data breaches, and you know, going back for years, so your email address was involved in one of these. It will ping that and show you. That's why it's important to really keep your passwords updated, use new passwords, and don't repeat passwords. These threat actors, they just see that information, and they just start trying it in different places and they get lucky. Tom Cronkright 13:20 Steven let's stay on email accounts because they just seem to be the genesis of all things bad when they're compromised. Not only complex password, but can you speak a little bit about the importance of email settings and analyzing email settings. I think if this industry is ever going to set up Lunch and Learns this year is training our referral partners to identify whether their email accounts have been breached. This is one way but within the email account have rules been set up where their email account is being monitored in real time. They just don't know it and how you prevent it. Steven Dougherty 13:58 So essentially, like I said, these guys log into your email account just once, they go into your settings and they set up a setting or filter to auto forward out of all your emails that way and it’s not only that, they're deleting everything that gets auto forwarded out. They can tailor it to be very specific that you'd have it say you know, any email that uses the word “wire” or “account” or “payment”. I want you to filter that out to another email account and then delete it. So, it is very targeted with that. What we recommend and what you really should be doing along with changing your passwords very regularly, as you change your password every time go in and check those settings and make sure no unauthorized settings have been set up. You can also actually automate that through different your IT groups if you have them. Your IT groups can even, especially if you're using suite like Office 365, can be set up a way to monitor all email rules that are set up on your system to prevent unauthorized roles being set up. So that's one thing is very important. You guys got to check on that just as much as you can get your password. If you do review your rules, you will be able to see the rules set up. Most of the time, these are set out as user generated rules that you can see in those settings. Pretty easy to do. Particularly in Outlook go up to the gear on the right, click that drop it down, go to Settings, go to rules and alerts if anything's been set up there. Tom Cronkright 15:56 Yeah, I mean specifically any forwarding rules, any autodelete rules, any rules that scan for keywords in emails, all of those you can see either in Outlook 365 version or a desktop or native environment. Also in Google, Yahoo. All the different platforms have essentially these rule settings. The challenge is if the rule is set up, you could change your password every single day. The fraudster is still moving that communication into other accounts. So, you just got to make sure you kick him out of that. Then you reset the password and then you enable two factor or what's called multifactor authentication. Multifactor authentication is an additional security setting. So, you have your username, you have your password. We use a complex password manager here at our all of our organizations. That is LastPass. (https://www.lastpass.com) In a complex password manager you create this super secure master password and then for every site that you link for your email accounts, they create some ridiculous password that like you'd never know it. When you enable multifactor, multifactor is one more layer of security that provides a unique code each and every time that you send in a request to access the account. This adds a little bit more friction. But again, we're balancing friction with user security and data security. As attorneys the bar for us is always higher. There's no difference in court when we're standing up and someone's on the other side saying “Let me get this straight. You didn't check a box of multifactor that could have prevented this whole thing because this seems to be the proximate cause of where we're landing here.” Either your IOLTA account or escrow account was drained. Or I've got a consumer facing the loss of life savings. So that's just the brutal truth of it guys. Then using secure email, judges really don't understand secure email, but secure email is essentially a rail that provides security layer between one server and another server. So, you're sending the email on more secure basis. What we're talking about is making sure that that destination point isn't compromised. Because if the destination point is compromised, secured email doesn't do any good at all. Okay, the secure email secures it in transit, not what they call “at rest.” So, you got to do both. Melissa Jay Murphy 18:03 So, it seems to me that these additional safeguards and procedures are all a result of the increasing sophistication and increasing numbers of attempts. So, you know, I just don't think this is somebody in a gray hoodie in a Starbucks anymore. So, who is it that's behind this now because hasn't that change? Steven Dougherty 19:13 She's stole my line or she stole our favorite line. The line is that these are not your lone wolf hackers sitting in their grandma's basement drinking Mountain Dew and eating Cheetos, their favorite lives. That's what people think when they think you know, computer hackers, cyber fraud. But no, it's definitely not these guys operate what I refer to as the enterprise business model. It's a top-down business with a C suite and all set up with people below them to work these very complex organizations. They are transnational organized crime organizations. With the C suite you have your CEOs, then they call themselves that Mr. CEO, Mr. Chairman, and they're the ones that are kind of dictate how they want to do their attacks. Then they realize okay, I need somebody to pull off my phishing attack. So, they'll go hire somebody to do that. Then they're gonna be like, “Alright, cool, the phishing attacks good. I have the good information. I know when this transaction is going to be done, and I'm going to redirect it.” So now it's redirecting to another bank account. So now they need the launder that money. They need to get that money to themselves to do that they go and set up a sort of financial director wing. That is this expansive network of global money mules that just constantly are transmitting money back and forth. This problem has gotten really bad. We're seeing a lot of money mules actually be picked from some romance scams prior. So, they are unwitting money mules. They don't know what they're doing. They're just told by someone they met online, that they're going to receive money and help them for construction project or something like that. Then afford those funds on. It is a sprawling network of money mules here. It gets even more granular you have sort of an admin team that helps maintain spoof domains that they need to carry out their attacks or monitor, maintain email addresses or pull off other types of fraud such as unemployment, insurance fraud, even ransomware is tied into this now to kind of bolster up the organization. So, you really have a robust organization you're dealing with here, and they're very complex. They're very efficient, and as they make more money from these frauds, they only get better. Now they can afford more money mules. They get afford better malware. So, it's just momentum that they've developed and it's a momentous problem. Melissa Jay Murphy 20:51 I know that they're targeting title agents because title agents are receiving and sending money, but the source of most wire diversions and claims that I am seeing amongst Fund Members involve that mortgage payoff and they're intercepting the mortgage payoff when it's being sent to the title agent? Are they sort of hoping that there's an easier way that they can get to that mortgage information and scale it up? Do you think that that's on the horizon? Steven Dougherty 21:37 Yes. Or it may have already happened, in some instances where they're getting in and they're getting pure information fed to them before it reaches its destination. Tom and I are seeing something very similar. We can't speak about specifics, but Tom if you want to touch on it. Tom Cronkright 21:55 You're exactly right. Melissa, I ran a statistic. The average open mortgage balance at the beginning of this month was just over $299,000 across the country. Okay, we haven't seen those levels ever. Again, that's because of the accelerated increase in home prices. So, a few years ago, mortgage payoff fraud really was I'm sitting in the real estate agent’s account. I'm seeing the closing attorney send over the mortgage payoff between the client they're sitting somewhere and they're obtaining the original copy of the mortgage payoff. They're taking that PDF, they're using software to doctor that up and then spoofing typically, the loan servicer or the lender saying, “Hey, we had to make a correction. Here's an updated payoff.” So, they're we're using it as kind of an updated payoff scam. But what they're realizing now is to say, “Wait a second, what if we could distribute your original payoff into the email system of the party requesting it, and it's fraudulent from the beginning, like the first one has been tampered with?” So, we saw this early on in the Nashville area mid-summer. And then we just saw in the state of Texas, where the fraudsters again appear to have compromised the electronic fax account of the title company or title companies using the fax to receive mortgage paths. Look, I'm in the industry, 98% of these come over by “fax”, but it's not the fax of days passed because that was a machine that telephonically printed out something on a piece of paper. We said we can't do that anymore. We need the fax to be converted to a PDF and an email and then have that sent into our general stream of communication. So, they figured out I call it the note of distribution. They figured out that to your point well that's that's a great phrasing. We can compromise these at scale. If we could get access to the eFax, GFI FaxMaker. It doesn't matter guys, but if they get in there, they can reroute traffic from the originating servicer where the payoffs being sent from, doctor that up, and push it right through the same rail down in the email. Fascinating scam, and we've seen them do it unfortunately at scale as recently as a couple of weeks ago. Melissa Jay Murphy 24:44 What I hear you saying is that in those situations, it doesn't matter if the criminal has put email forwarding rules in my account, or not, because they're in there before it even gets to me. So, they're not even diverting any information from my account. They, you know, they've moved on to a much more sophisticated scheme. Tom Cronkright 25:16 That's 100%, right. If you look at what 80% by definition of our disbursement obligations, sit at the mortgage payoff. We can't adequately insure it. The most insurance you're going to get is 250,000 per and that's assuming you did 15 things and a COVID test and a blood test to show them that you did everything to mitigate the insurance company's risk, which if you did that, you wouldn't have the fraud. And I think the other thing that we're seeing is, you just simply can't trust mortgage payoffs that are coming from in either direction from the fax right now, from a closing attorney that you relied upon to gather that because you're the dispersing agent, not the rep representing the seller. And if you don't mind, I'll touch on this. It comes down to essentially three things. One you have codified somewhere a trusted list of mortgage payoff information. Treasury templates are the best way to do it. That's stored on your bank server wall. So, you start to set up the wire. You type in Bank of America and all of a sudden, a bunch of known trusted accounts pop up, you compare it to what you have, you release the wire. Some people do that on spreadsheets. I've seen people that have had folders of PDFs that check, check and date. However, you do it, history can be a very, very good guide on what is true versus things that are not true. When it comes to mortgage payoffs. Calling to verify any new account information is even harder than it was before. It’s hard enough to get them to initiate the payoff. It's even harder right now to confirm just general bank account information for a wire but you have to do it or you just send a check, add some per diem, send a check but that's why it's important to get the mortgage payoff early in the process. Let's just think about mortgage payoff risk. Unless I'm sorry, this is going to breach some underwriting standard. The risk only goes down because the worst case is they made another payment. So, let's just get it out in the open. Let's get it before the fraudster has visibility to it. We can always ask for an update or they'll settle that out with the borrower at the end if for some reason they're radio silent on the verification. Know that we're in the process and we will be launching at CertifID an insured mortgage payoff database for spring market. So, we're in the process of analyzing over 300,000 trusted mortgage payoff records right now. We'll be piloting this in the next two weeks with a group and then we'll be launching this out. This is the number one threat. This is the threat guy that keeps me up at night. Because I know that any loan, commercial, there the table stakes could get large very quick where I'm out of business as a Title Agency in one single wire. We were involved last year in a 22 and a half million dollar, about $21 million commercial payoff wire recovery that landed in the money mule’s account. One wire that would have been lights out. Steven Dougherty 28:28 So, if these do happen to you, and there's a very good chance that it may just due to the threat landscape that's out there. The one thing that's extremely important here, time is money. If you discover this, you need to report it as quickly as you possibly can. There are numerous ways to report it. You can report it through any secret service field office, you can just Google “secretservice.gov and field offices.” You guys I believe are all in Florida, right for the most part. So, while our Orlando Tampa and Miami offices are all very active, very good offices, you can reach out directly to them. Or you can also go to FBI’s IC3, the IC3.gov. www.ic3.gov It’s the Internet Crime Complaint Center. You can also report it there. I'll put the link to the Secret Service field offices in the chat here in a second. But time is money, Tom, I mean, you know you get live streams of victims to you, and you get them to me and how fast have you seen money move within hours. So, we need to stress that time is money. Tom Cronkright 29:27 Yeah, what used to be touted as you know, 72 to 96 hours with the advent of cryptocurrency and just the sophistication. So, what happens in most cases is that when fraudulent wiring instructions are sent, they are typically sent from somewhere overseas. They're sent from the syndicate running the fraud play, but domestically, they have a series of money mules that either know what they're doing or wrapped up in something they're not even aware of that take money in and then quickly move it out. They can withdraw it in cashier's checks. They can withdraw it in cash. They can buy gift cards. Most insidious is that they move into crypto wallets. Then those wallets move and then they move out into other fiat currencies in different countries, and they can move those funds while the Federal Reserve is closed. So, as we're trying to digitize and make it more convenient, these rails of moving money, that are we would look at as kind of nontraditional, it's just a superhighway for them to launder funds and almost completely avoid detection. So, if you're two or three days in, and you haven't triggered a response from federal law enforcement and notified the banks, I mean the to your points Steven we've seen money move within hours. But we've also had instances where the money was in the bank branch. We notified the bank through our efforts, and they were stopped cold. I love stories like that. But it's harder. It's harder to reclaim the money after it's been stolen because they understand the gravity of how quickly they have to move the funds. Melissa Jay Murphy 31:13 So let me go back and let's try to make this really clear to our audience. The moment that you realize that either a mortgage payoff has been diverted or perhaps the sellers’ proceeds have been diverted. You contact a secret service field office, you email the IC3 website and file a notification. You must I assume contact your sending bank and the receiving bank and who do you ask to speak to at both the sending bank and the receiving bank? Tom Cronkright 31:59 So, before you answer, Steven, here's the point of this. What he's about to say needs to be done in advance. These relationships in this pathway needs to be groomed before you have an incident because what we found is that when crisis hits, people freeze and you're burning daylight, that could mean the difference between something coming back and everything being lost. So, I didn't need to step on you there Steven, but what we're about to say is do not wait. This playbook should be set in the organization before there's an incident. Steven Dougherty 32:41 The way I prioritize it is first you should actually contact your financial institution that sent the wire. They generally will on your behalf send a wire recall or a swift message that it was due to a fraudulent means or compromise. If you contact the receiving bank directly if you're not a client for them, oftentimes they won't help you because you're not their client or customer. That's just a caveat. But immediately contact your financial institution and tell them what happens and see if they can put a wire recall in. The next step is to contact federal law enforcement or local law enforcement really whatever you're comfortable with. But what Tom's point was great is you need to have an incident response plan in place before these happen. You need to know who to call to help you. Local law enforcement can help with this. State law enforcement to help and federal law enforcement. So, it's whoever you're comfortable with who you developed a relationship with. You can just Google obviously I provide the Secret Service field offices link you can also Google FBI field offices. HSI Homeland Security also plays in this space. IC3.gov is just a place to report that these happened. Even if there's an attempt, report and attempt. Even if you stop it, please report it to the IC3.gov because what that does is it now gives us meat to go after because there's still the bank account that was used to divert the funds, or the spoofed emails used to send the attack email. We can go add to that as well. So please, the biggest steps are to have an instant response plan in place where you know who to contact and how, and two report everything you can wherever you see because not only does it protect yourself it protects the entire community. Tom Cronkright 34:24 Yeah, well, what I've what I've been most surprised by when I'm most surprised, but one of the surprising things Steven I've involved in well over 100 recoveries last year for 35 to 36 million victims. And I say that because each one has a little uniqueness to it. One thing that seems to be bubbling up is if you're banking with a credit union or a community bank, maybe a smaller regional bank. You might be surprised, and you don't want to be surprised when you're going through it, that they don't have a fraud desk, they don't have somebody that understands how to send an alert through the Fed wire system or notify the receiving bank which is typically a money center bank. So, it's leaving a small bank. I mean, 9 times out of 10 it's hitting one of the big guys, because of the coordination they have globally. So, if they don't have their own incident wire fraud communication, all those channels. I mean, I had to educate bank presidents on what an indemnification and hold harmless looks like going to a money center bank, to allow the funds to come back to a victim. It's surprises me as a lawyer. So just don't be surprised. You run this. Sit down with your banker and make sure you know exactly who to call and the information that they will that will require. If they in turn, have the rails set up to protect you and get the documentation that the receiving bank is going to need to put a suspension on the account, freeze the movement of money, and hopefully work that back to you or your customer. And Melissa, it's worth noting it's not just the disbursement wires, yes, those were a direct hit to the closing attorneys. But it's the risks that buyers face when the closing attorney is spoofed. They haven't been educated. They haven't been engaged on this issue. They haven't received wiring instructions. And all of a sudden at the closing table we realize that there's no certified check in hand because their life savings was wired a few days ago. And I'm going to say this it does not matter to tell the people we don't receive wired we only receive certified checks. We have seen time and time again. The fraudster redirecting through communication the requirement that “Nope, can't have a check now because I've got an OMICRON outbreak or something's going on. I need your wire and I need your wire today.” It's just we've seen it unfortunately. Melissa Jay Murphy 37:05 It does seem to me that reverting to what we call the old-fashioned way of conducting business has some role here, has some advantages here. Some of the questions on the chat or have to deal with these new fax systems that do come straight to your computer versus more of a phone line that's sitting on the desk behind you. But is it better to use an old-fashioned fax machine to send and receive things? The problem is a buyer, the normal consumer, out there doesn’t have a fax machine sitting on their desk if they have a fax number? It's something tied to their computer, but certainly for the purpose of receiving a payoff from a lender. An old-fashioned fax machine seems like it might give you some level of protection. Then in dealing with for example, buyers that need information about where to send their cash due at closing. I don't know what the average homeownership is now, but you know, it's five to seven years, maybe. People don't do this on a daily basis the way we do and so they're not sophisticated and educated about this cyber fraud and rather than communicating with them via email it seems like a reliable form of communication is the good old-fashioned phone. Do you agree? Is that something real practical piece of advice? Steven Dougherty 39:01 You know for customers; this is not a muscle memory transaction for them. Just to put it out there, everybody puts disclaimers at the bottom of their email saying, “wire fraud is real.” Well, guess what? People don't read anything below your signature line in your email. They read the content. That's it, they're not reading and paying attention to that. So, you really have to engage your clients and customers on a very sort of vigorous basis. Tom, you agree that you should do it upfront and throughout the entire process. Let them know, this is the process, and fraud exists, this is how we combat it. Tom Cronkright 39:44 We didn't create this threat. The threat is not going away. It's only getting worse. So, what do we do in response? My argument has been to the industry, to my staff, to our community here in West Michigan primarily is that this isn't going to happen on our watch. And if it does happen, we as transaction participants as advisors, lending, real estate, title and closing that we've done everything we could. We met the standard of care as is being defined in the courts, unfortunately, federal and state as to what success looks like for a consumer to be protected. The challenge is we're not driving them to the bank. We're not over their shoulder when they're opening online banking. A lot of them are banking with an eBank and there's no bank branches. That's the other realization with this economy we're in. We're not in a good fun state. So, I don't have to take wires and if I put my title owner hat on, I don't have to take wires in for cash to close. Now don't have to send wires out, pursuant to the state of Michigan. But what I need to do is educate the consumer that this thread is out there. They can strike at any point and we're going to set you up for success. So, the first thing we do is when we issue the title commitment, we send our wiring instructions along with a wire fraud notice to every consumer. We send it through CertifID. You may even say I'm going to send it through secure email; however, you send it just make sure that you have confirmation that they're the ones that actually received it. Because in a vacuum you can say “Look, no wires only checks. Got it great. We'll see you at closing” and then they get tricked after and it's simply not enough. The other thing that we've done is educate them of the closing scheduled. “Hey, remember if you are going to wire only those instructions that were sent earlier can be trusted.” With regard to enrolling the real estate agents and the referral partners. This is the key. This is where you can multiply the message and multiply this yourself in this conversation because guess who they trust? They trust the real estate agent because they're typically the one driving the traffic. You're being fed off them. Everyone is kind of beholden or codependent on the real estate agent. There's an opportunity there that at the agency formation, this knowledge transfer takes place. So, through notices, we've provided what we call a “day zero document” that our real estate agents put in Dotloop and DocuSign that we have the customer sign because they might start working with a buyer six weeks ago trying to find houses. We've been involved in wire fraud recoveries where the purchase agreement wasn't even countersigned by the seller in the entire cash to close amount was wired to a fraudster by the buyer. Purchase Agreement wasn't even consummated yet. That's how early they can get approached. So, educating the real estate agent, you know, showing them what you're doing to protect the consumer to protect them, and then getting them as part of the lexicon of how they do their business. Wire fraud becomes this conversational piece, not something that we hide behind or act like it's not happening. That in my opinion, is how you drive sustainable engagement. You can't do it all yourself. Melissa Jay Murphy 43:16 Interesting. I think thiss has been an incredible source of information. So, thank you to Tom and Steven. I think that we might have raised some questions that we have not been able to answer and those have been reflected in the chat. So, what I am going to try to do along with my team is look at the issues and questions created by the chat. Review the information that Tom and Steven have shared with us. Try to make some organizational sense to it and try to push something out to Fund Members to update them on the best way to deal with this. Nothing about what you do when you realize there's been a crime is really different than what's on our website right now, Fund Members. We have the IC3 website. The Secret Service connection is something that's a little bit new. And so, we're definitely going to add that kind of information to our webpage. https://www.thefund.com/information-center/information-security.aspx Steven, so thank you for that. Steven Dougherty 44:35 On that website, you can actually go back to do investigations. And there's actually numerous pieces, there's PDFs, there's documents that help prepare for a cyber incident and give updated information on cyber stuff that you can definitely pull down and link to on your website. www.ic3.gov Melissa Jay Murphy 44:54 We will definitely look into that. So, with that I am going to thank Tom and Steven again. I'm going to thank all of you 190 people that participated in this webinar. Thank you so much for your time and attention. Don't forget we're going to push this out on the podcast. And so that's another way you can listen to this webinar again in the information. We will make sense of the comments and information that has been posted in the chats and push that out to you. And as I always do when I wrap up one of these is thank you above all, thank you for your support of The Fund.

You can watch this episode at https://youtu.be/jqc-78Zm6UU.  A LOAN ESTIMATE happens when you apply for a loan, but it's a long road before that loan funds. A CLOSING DISCLOSURE tells the borrower what may have changed. 0:00 – Introduction 1:00 – There's ALWAYS confusion about these docs. Loan estimate comes out way up front. Closing Disclosure comes right at the end. They should be ALMOST IDENTICAL. This is an improvement over the HUD-1 Settlement Statement — it's way more transparent, and way better for the borrower. 3:25 – 3 Day Rule. The borrower has to receive a CD 3 days before they sign the loan. The review should be pretty quick. 4:02 – Closing Disclosure Basics. 1) Loan amount. 2) Interest Rate. 3) Full Payment. 4) Closing Costs. 5) Cash to Close. 4:16 – Loan Amount. 4:31 – Interest Rate. 4:47 – Full Payment. 5:12 – Closing Costs. 5:20 – Cash to Close. 5:40 – Closing Costs vs Pre-Paid Costs. Closing costs are costs to obtain the loan. Prepaids are costs associated with the transaction, but NOT the loan. 6:25 – Shop the Loan Estimate. Compare loan estimates from different lenders to see which lender is giving you a better deal. 7:50 – Property-Specific Expenses. These can be surprises, for example HOA transfer fees. 8:29 – What'd We Learn? 10:13 – Bloopers.   * No estimations or disclosures were harmed in the making of this video. Please contact us to tell us you love us, you want to hire us! Call or text:   Realtors with Hive Collective at Presidio Real Estate: Tyler Cazier: 801-210-0230 Aric Wiszt: 801-228-7687   Lender with Elite Team at Security Home Mortgage: NMLS: 178787 Jason Christiansen: 801-669-7271 NMLS: 240472   A Production with Security Home Mortgage's Jason Christiansen, and Hive Collective at Presidio's Tyler Cazier and "Mr. Suit" Aric Wiszt.

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If you have ever went through the process of getting a mortgage then you are probably familiar with the term CD.  The first time I went the process of getting a mortgage it took me (Phillip) a couple times of hearing it to get the courage to ask, what does that mean and what the purpose of that document?  On this episode Jason Grimes and I discuss the ins and outs of the closing disclosure and its importance.     Powered by On Time Lending and Stone Hill Wealth Management

What are Closing Cost?   Closing Cost are fees associated with your home purchase that are paid at the closing of a real estate transaction.  I like to call it  “Cost of doing business” and every loan will have closing associated with it.  Depending on what type of loan you do the cost will vary.  You will pay a Down Payment and Closing Cost, these cost could range from 2-5% depending on the Purchase price and location.We will breakdown a "Closing Disclosure" so you will know what to expect.Lets stay in touchFollow me on IG @garyhomeloanshttps://instagram.com/garyhomeloans?r=nametagFacebookhttps://www.facebook.com/garyhomeloansGary Taylor | Sr. Loan Officergtaylor@afncorp.comwww.afncorp.com/garytaylorD: 302-469-0709 F: 302-467-2525Raziel Perez | Loan Officer Assistantrperez@afncorp.comD: 302-272-5649

Episode 5 : All About The Closing Disclosure In this episode, The Closing Disclosure also known as the CD, gets all of the spotlight. What is the Closing Disclosure? Where did it come from? And when did it come into play for the Real Estate industry?Questions or inquiries, send an email to Info@SignaturesUSA.comPlease Support the Show in the Link Below!https://linktr.ee/TheLoanSigningHustleSupport the show

In this show we discuss: -How to Use Emphasis to Express Meaning ft. Peter George -Tips For Keeping Your Home Safe From Fires ft. John Lapointe -The Difference Between a Loan Estimate and the Closing Disclosure ft. Matt Bates -RIBlogger's Top 5 Early November Events Coming Up!

The closing disclosure is a document that has extremely important information on it which the borrower will review and confirm if they accept the terms and conditions they are being presented. For this reason, you need to master this document and know exactly what's on it. You'll have to provide this document to borrowers on every loan you do and will often have to answer questions they have on it. In this episode, you will learn some of the most important things you need to focus on when going over the CD or closing disclosure. Reading and understanding this document is important but it's even more important to find ways to help the borrower by finding mistakes on this document to prevent potential problems during and after the loan process or by saving them money. Be smart and become familiar with the closing disclosure. --- Support this podcast: https://anchor.fm/joe-correa1/support

When purchasing or refinancing a home, you will receive and sign a Closing Disclosure 3 days prior to your closing date. Here is how to read this document and be prepared for your Closings Costs, Escrow, and Property Taxes.

https://www.biggerpockets.com/blog/closing-disclosure

Do you want to count your eggs (profit) before they hatch (you close on your deal)? If you are curious as to when to do a double close on an assignment deal versus doing a single close, you'll want to listen to this episode. We'll also disucss the use of blind HUD's (Closing Disclosure document) in your wholesaling business. If you want more Pro Tips, join our organization today at www.TexasStarterKit.com/podcast!

Do you want to count your eggs (profit) before they hatch (you close on your deal)? If you are curious as to when to do a double close on an assignment deal versus doing a single close, you'll want to listen to this episode. We'll also disucss the use of blind HUD's (Closing Disclosure document) in your wholesaling business. If you want more Pro Tips, join our organization today at https://my.captivate.fm/dashboard/shows/www.TexasStarterKit.com (www.TexasStarterKit.com)!

Hablando de Bienes Raíces con Fredy Peñaranda Team !! Este es el equipo de profesionales que te va a llevar de la mano a la compra de tu casa propia en EEUU. Si te gusto el video dale like y subscríbete al canal para recibir mas información de como comprar o vender tu casa en EEUU. Quieres acceder a mas información: - Como solucionar las 4 mayores barreras para comprar casa? : https://youtu.be/FY58qWSWdY4 -Estrategias para obtener el dinero de Down payment si afectar tu bolsillo: https://youtu.be/Igq6aiEoVC4 -5 Mayores errores que cometen las personas cuando quieren comprar una casa en EEUU: https://youtu.be/LO-BXnVt-nY - Como comprar casa con ITIN Number: https://youtu.be/hW8bnQpURGg - Generación de los Milenios - Como vencer las mayores barreras y mitos para comprar casa: https://youtu.be/XCcB2F_LfFo Para tener acceso a todos mis videos puedes visitar mi pagina web: https://fredypenaranda.com/videos/ Información de Contacto: Email: fredy@fredypenaranda.com Telefono: (832)696-3031 --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app Support this podcast: https://anchor.fm/fredy-penaranda/support

How Long It Takes To Buy A House? Let's take a closer look at the steps to buying a house. There is plenty you can do to prepare yourself for house hunting to shorten the time it takes to own your next home. Step 1: Organize Your Finances - Get A Mortgage Preapproval (About 1-2 Weeks) You'll need a preapproval before you start shopping for a home. Your lender verifies your income and checks your credit history and current debt to determine how much home you can afford when you apply for a preapproval. Find your credit score and review your credit report. Save for your down payment and closing costs. Avoid new debt, which will raise your debt-to-income ratio. Organize your paperwork. You'll need your W-2s, tax returns, bank statements and pay stubs to get preapproved. Step 2: Shop For A Home (About 3 Weeks to 3 Months) The longest part of the buying process is often the hunt for the right home. Expect to spend around 3 months finding the perfect property. If you've done your homework and understand what you're looking for, you can avoid wasting time looking at properties that won't work for you. But don't be afraid to take as much time as you need. Work With An Agent To Speed Up The Process The best way to fast-track your shopping process is to work with a real estate agent. Real estate agents are local professionals who are experts in the market and the home buying process. A real estate agent can help you find homes in your budget and narrow down your search. They can also help you submit a strong offer and speed up negotiations. Step 3: Submit An Offer Have it Accepted And Negotiate (About 1-5 Days) Your real estate agent can help you make an offer when you find the right home and you're ready to buy. An offer letter lays out the terms of the sale and includes details like the price, closing costs you want the sellers to pay and any repairs you need made before closing. Your real estate agent will handle the job of writing your offer and negotiations. When the sellers receive your offer letter, they have three different options to proceed: Accept the offer: Reject the offer: Make a counteroffer: Step 4: Prepare For Closing - Submit Paperwork - Do Inspections (About 1 Month) Most lenders require 30 – 45 days to finalize the details of your loan and to make sure your home meets your loan's minimum requirements. Your lender will schedule an appraisal and underwrite your loan during this time. We coordinate inspections and final items during this time. The Appraisal - This is because the appraisal ensures that the lender isn't giving you more money than your home is worth. Underwriting - Your lender verifies your income, assets and debt to make sure that you qualify for a loan during the underwriting process. Home Inspection - A home inspector will look at things like a home's foundation, structural components, roof, HVAC, plumbing, and electrical systems, then provide a written home inspection report with results. Step 5: Close On Your Loan (About 1 Week) It's time to close once your appraisal clears and your lender finishes underwriting your loan. Your lender will first issue you a document called a Closing Disclosure. This document outlines the final terms of your loan, including your APR and what you must pay in closing costs. You're officially a homeowner after you finish up your closing meeting and sign a bunch of documents!!! Summary: You Could Be In A New Home Sooner Than You Think Most buyers can expect to spend around 6 months purchasing a home. It will usually take about a week to get your mortgage preapproval after you apply, and you'll spend around 3 months looking at properties. It may take you between 1–2 months to negotiate an offer with the seller depending on your local real estate market. From there, it will take around a month for your lender to finalize your loan and another week to schedule a closing meeting. Remember, buying a home is a personal process that differs for everyone. Some pe --- Support this podcast: https://anchor.fm/dnarealtygroup/support

Understanding The Closing Disclosure - Mortgage Settlement Statement Explained! The Closing Disclosure or CD is part of the TILA/RESPA Integrated Disclosure rule or TRID. It is the companion to the Loan Estimate or LE and shows your final charges. In this video I will go into detail as to what each section means to match back to the LE to ensure you know what you are signing and explain the 3 day rule.

Top Five Things You Should Demand from Your Lender when Buying a Home1) How does a buyer know what to expect from a lender when purchasing a home?a. They don’t – People that want to buy a car go fall in love with the car, THEN figure out how to get financing. Its the same with a home purchase.b. Most go off Agent Referrals or use their banks 2) What things should be demanded from a lender before buying a home?a. Pre-approval vs Pre Qualificationb. A thorough explanation of what the buyer would need in cash to buy a home 3) Once a buyer finds a home – how can the lender help the buyera. Great lenders provide custom pre approval lettersb. Call listing agent attesting the strength of the buyers ability 4) When a buyer gets their offer accepted what happens next?a. Meet and get loan application doneb. Order the appraisal ASAP – this costs but the sooner the better i. Appraisal delays can present issues ii. Appraisal Challenges present issues5) Don’t buyers want to do an inspection before they order the appraisal?a. Typically inspections are done immediately after the contract.b. They can but it creates all kinds of stress because of the delays i. VA has 10 biz days, conventional take longer ii. Buyer could always cancel appraisal 6) What are some other things a buyer should demand from their lender?a. COMMUNICATION: Weekly communication as minimumb. Communication to listing agent on status – sellers REALLY CARE about appraisal etcc. Biggest thing: CLOSE ON TIME!!! i. Nothing more frustrating than lender not being able to close on time ii. Typically happens over late execution of Closing Disclosure – lenders must spearhead this to get it done on time.To find out who are the Preferred Lenders we recommend call us at 719 301 1802.

The ON DEMAND 45-hour Florida Real Estate Sales Associates Post-Licensing Course sets the standard for real estate education in Florida. Recently updated to reflect changes in Florida law, this latest version offers expanded discussions on lead generation, fair housing laws, and financing, with examples using the NEW Loan Estimate and Closing Disclosure forms which have replaced the Good Faith Estimate (GFE) and Settlement Statement (HUD-1) forms. Special learning features include action lists, forms, case studies, and “In Practice” sections for each unit. With two 100-question final exams, students can test their retention of the material. In addition, this title fulfills the 45-hour state requirement. I will do all I can to help them become more comfortable and competent in your real estate activities. I want you to know the rewards you will receive in the business from study in each area being presented and discussed. I will be throughout the course be making and keeping the learning alive, examples from my own professional experience to make teaching points.  You have three choices to purchase 1) a physical book or 2) a eBook 3) the online class Vinnie De Rosa Florida Licensed Real Estate Instructor since 1980 Florida Real Estate University.com

What is RESPA?  What is a closing disclosure?TJ discusses the lender's responsibilities to you and some things to look for as you get closer to the closing date.Learn more at www.knowbeforeyoubuyrealestate.com

Closing Disclosure Explanation from Emmett Dempsey. The HUD-1 is no longer used for most loans. Learn more about the Closing Disclosure (CD). #TRID #ClosingDisclosure #Mortgage ❤ Enjoying this podcast? Be sure to L I K E and S H A R E the love. ❤ I'm a 10+ year mortgage professional here in Port St Lucie, Florida. I am a US Army Veteran (AIRBORNE!) husband and father of 4 lovely kids...and a Belgian Malinois named Leo. I love helping families with their home loan needs. Want to know your mortgage options? Visit my site for your free evaluation: https://dempseymortgage.com B L O G ➳ https://dempseymortgage.com/blog P O D C A S T ➳https://anchor.fm/emmett-dempsey F A C E B O O K ➳ https://www.facebook.com/emmettmortgage I N S T A G R A M ➳ https://www.instagram.com/emmettmortgage L I N K E D I N ➳ https://www.linkedin.com/in/mortgagel... T W I T T E R ➳ https://twitter.com/emmettmortgage W E B S I T E ➳ https://dempseymortgage.com I am very grateful for all of my subscribers and folks that watch my videos and listen to my podcast. I hope I can help answer some questions about home buying and the purchase/refinance process. I look forward to hearing from you soon! Emmett Dempsey Mortgage Advisor / Branch Manager NMLS 208522 emmett@genevafi.com https://www.dempseymortgage.com (772) 618-5058 - Call / Text Geneva Financial, LLC NMLS 42056 1850 SW Fountainview Blvd #210 Port Saint Lucie, FL 34986 Equal Housing Lender --- Support this podcast: https://anchor.fm/emmett-dempsey/support

Last month, after more than three years of urging by the industry to provide written guidance, the CFPB issued four FAQs on its TILA/RESPA Integrated Disclosure (TRID) Rule. In this podcast, we take a close look at the FAQs and what they tell creditors, particularly its guidance on when a corrected Closing Disclosure and new three-day waiting period are required (with a caution for those selling to investors) and the safe harbor for using a model form.

  Keith gives an update on his active foreclosure and discusses the HUD-1, also known as Closing Disclosure. One of the things he learned from his CPA is to look closely at the HUD-1 or the settlement statement because a lot of the mistakes tend to happen here. He lays down the things you need to go over and put consideration into, whether as a buyer or seller. He then shares about his foreclosure and his experience of deciding when to evict someone out. — Listen to the podcast here: Foreclosure Journal Part 3 And The HUD-1 I’m going to talk a little bit about the HUD Statement, the Settlement Statement. If you close at a title company, you purchased a house or you sell a house, the buyer and the seller get a copy of this. It is the document that records the transaction and the pieces of the transaction. The thing that makes it the most interesting is a couple of things. One my CPA always requested, which is pretty standard if you invest in real estate or purchase, is the document by which my CPA will compute my taxes. I was taking a class by http://privatelenderpodcast.com/plp-013/ (Michael Plaks), who was guest on this show. He handles nothing but federal taxes and state taxes for real estate investors. He taught that you need to look through this HUD-1, the Settlement Statement with a sharp magnifying glass and a good lens because a lot of mistakes are made here. I’m saying this not only just as a lender because I always look at this as a lender as well. During the process, I’ll get my commitment for title insurance, but I also get a copy of a pro forma HUD-1. It’s a living, breathing document. The down payment is on here. The insurance premiums, the costs, and the fees to file with the county. All of that is listed out here. If you’re buying, selling or lending, you want to check this to make sure that your interests are best represented and there’s not a typo or an error. There are essentially two sides as the left side and the right side. It starts pretty simple. The contract sales price, what were the settlement charges that the borrower is going to pay so as the closing costs that the purchaser, in this case, I’m using one of my HUD-1s from a transaction I did where I was the purchaser and not the lender. However, it doesn’t matter for the illustrative purposes, but I will put a copy of it on the website. The HUD-1 is going to list off all the costs and fees. There’s going to be HOA dues, insurance, taxes that need to be paid or prorated. They’ll take into account the earnest money and how much the principal of the new loan is going to be. There is the owner’s policy that’s paid by the seller. When someone buys a house, the seller normally pays for the title policy, for title insurance, not for property insurance. It will go down and say the estimated amount from the borrower, how much they need to bring to the table and also with the seller contract sales price, any monies they are giving up, any concessions that they’re having to give up. Lending is a business; it's an investment.https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-052/&text=Lending%20is%20a%20business%3B%20it%27s%20an%20investment.&related (Click To Tweet) Oftentimes the seller will contribute to the buyer’s costs. In this case, I negotiated $4,000 off of my original contract price. There are also interesting things. If there’s a mortgage on the property, how much that has to be paid off. That’s key. It’s taken into account. The settlement charges to the seller, oftentimes they pay more, they pay the realtor fees. That’s going to be part of their fees. That will come out of their end. You want to make sure that everything is correct. Your loan payoffs are correct. You want to make sure that anything that’s quoted in here is going to be accurate. Insurance premiums, for...

On the debut episode of Closing Disclosure, Juan and Breanna share their home buying journey. From the ups and downs of losing out on homes to the best parts of being homeowners, they take us along for their ride. #homewithdom #buyandsellwithdom #denver #corealestate #REALTOR #colorado #firsttimehomebuyer #homebuyer #journey #closingdisclosure #podcast

In this, the 10th and final Client Commandment, we cover the basics of the Closing Disclosure, and the things you really should know about before you sit down at the closing table.  We bring you up to speed about the things you should question, and the things that really are normal. We also get in to some story telling about a home warranty company that really needs to be called out for being sleazy.  Enjoy the fireworks!

Do you know the Truths vs Myths about Mold? In studio to give us the Truth about Mold, is Chicagoland’s Premier Home Inspector, Will Decker, from Decker Homes Services! Do you know what to do when: “All is not well at the walk-through?” and “There’s a problem with the Closing Disclosure?” In studio to educate […]

Buying a home? Click here to perform a full home searchSelling a home? Click here for a FREE Home Price Evaluation Call me at (616) 447-7025 for a FREE home buying or selling consultationFirst-time home buyers often ask us about closing costs. What are they and how much do you have to pay? Closing costs are all the acquisition costs associated with securing your mortgage. They are outside of your down payment, so you’re going to need your minimum down payment required AND your closing costs in order to acquire the mortgage. Closing costs are generally about 3% of the total purchase price, depending on the type of mortgage. At the beginning of the process, you will get a disclosure from your lender giving you an example of what the costs might be. The Closing Disclosure will have it calculated for you so you know exactly what you need to bring to the closing table. The next question we usually get regards who pays for the closing costs. As a buyer, it’s your responsibility to pay them; however, we can ask the seller to give us some assistance in the negotiations toward paying some of your closing costs. If this is the case, make sure to let your agent know that you need assistance with closing costs so you can write it into the offer! If you have any questions about closing costs or any other real estate topic, please don’t hesitate to reach out to us. We would love to help you with all your real estate needs! 

Buying a home? Click here to perform a full home searchSelling a home? Click here for a FREE Home Value ReportToday we are here with Christopher Dale from Glen Oaks Escrow to talk to us about some exciting new changes coming with the TRID/Closing Disclosure Timeline. Starting October 3rd, three lending documents (Truth in Lending Statement, Good Faith Estimate, HUD 1 Statement) are going to be combined into one form, called the closing disclosure.Along with the change to the documents comes a change in the closing timeline. It will take our typical 30-day escrow, and bump it out to what could end up being 45 days. Chris has provided us with a great handout to talk about how the process is going to be affected, but for this blog, let’s take a look at the last 17 days of escrow and what it’s going to be like.On the 17th day before we close escrow, the escrow and the agents will be working together to prepare all the financials to deliver to the lender so they can prepare the disclosure. Once it’s prepared, the lender will be responsible for delivering it to our buyers.Once the buyer receives it, they have three days to review it. Once the closing disclosure is reviewed, we can then proceed to close the transaction and exchange the keys. If there are any changes to the closing disclosure, any material financial adjustments to the transaction can add another 3-day waiting period. Any last minute changes could also trigger another 3-day waiting period. One more important thing to note is that the 17 days we are talking about here do not include Sundays and federal holidays. To be prepared, your agent needs to have all of your financials dialed in with the lender before that 17-day period.If you have any questions for us, feel free to give us a call or send us an email. We can’t wait to hear from you!