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  • Landlord Resources

    Property Tribes TV - NMD deals Pt. 2: "Legitimate Structures" - definitive answers from mortgage broker, Lisa Orme ...

    I was joking about 118..just came in mind the advertisment Smile...
    Well, as I can see Phil took it very personal and he thinks you trying to scare people and probably slow down his business...
    I think its a very good idea that both of you made the video ,so people can choose and make up they mind and more importantly learn..But to be honest,at the moment I am very confused and would be great to see a video debate(as mentioned above).

    Vanessa said:
    Sacha,We are not making it personal, I can assure you. We are just interested in the truth.If in doubt, ask your lender to approve the deal structure. It really is that simple. Don't take my word for it. Don't take Phil's word for it. Don't take anyone's word for it. It's your money and your name on the line, so take responsibility and ask the question yourself.Ring 118 118 and ask for BM Solutions or TMW phone number. Report back what they say.
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    Sacha,
    Surely, if someone has a legitimate business model they have nothing to worry about? They would actually welcome transparency and the chance to debate and in public to clear up any confusion.
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    SASHA said:
    I was joking about 118..just came in mind the advertisment Smile... Well, as I can see Phil took it very personal and he thinks you trying to scare people and probably slow down his business... I think its a very good idea that both of you made the video ,so people can choose and make up they mind and more importantly learn..But to be honest,at the moment I am very confused and would be great to see a video debate(as mentioned above).

    Vanessa said:
    Sacha,We are not making it personal, I can assure you. We are just interested in the truth.If in doubt, ask your lender to approve the deal structure. It really is that simple. Don't take my word for it. Don't take Phil's word for it. Don't take anyone's word for it. It's your money and your name on the line, so take responsibility and ask the question yourself.Ring 118 118 and ask for BM Solutions or TMW phone number. Report back what they say.
    Phil means what he says. Clearly he believes his position is accurate. He even offers a guarantee. Go Phil.
    Being right and having the funds to cover the claims on the guarantee is another thing.
    Conventional lenders (BTL, not bridging, not commercial) want to make sure the borrower is first in line if there is a loan default. The lender has no upside if things go well. They get paid a fixed return without any way to share the risk/reward.
    Look at the credit crunch and other recent events. Lots of people believed strongly that they were on the right track. Lehman management did not know they were driving the firm into the ground. I politely suggest that Phil's reaction on the video is similar to Dick Fuld's belief that Lehman was right and it should survive. Being emotional on a video is nothing more than being emotional on video.
    Rather than believe a third party, just speak with the person who has the money you want to borrow. Let them make the decision as to what they will fund.
    BTW - I have been investing for over 27 years. The NMD discussion and variations have been going on the whole time I have been investing. Everyone wants the lender or someone else to take 100% of the risk. Some of the time there are ways to do such a deal. There was a period in the UK when lenders did allow gifted deposits. One of the biggest first offering such a solution was a US lender who would not provide the same loan terms in the US as they knew it would lead to fraud. That lender sold their loan book to Bradford and Bingley. Today the taxpayer owns B&B and the loan book they purchased is one of the toxic assets that took down B&B. Life goes on and the taxpayer is funding the risk the lender never should have taken on.
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    A bit of detail that may help:
    What RPB/Phil/HBF/Other ready made deal providers are saying is that they have covered the legal aspect by using 'in the middle solicitors' or other strategies so that the solicitors can say that they only knew what they had been told. They cover their brokers by inserting a little sentence into a letter to the purchaser along the lines of 'I am required to confirm that the deposit is from your own funds'. When I queried this sentence I was told that it was okay because on the day of completion the equity in the property being purchased did indeed become mine.
    Basically what happens is the rmd provider covers the backs (or attempts to) of themselves, their solicitors and their brokers and loads all of the risk onto the purchaser who signs the mortgage forms.
    I have confirmed with TMW that they would not have agreed to lend on a property had they been aware of the 'discount as deposit' scheme, but HBF is still witholding £6K from me because I contravened their T&Cs by withdrawing from the purchase. I withdrew because they wouldn't confirm that their sceme was legal and disclosed to lenders!!
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    Bang on John, I believe that emotions are not giving clarity to thought - especially when those emotions are in the public domain.
    Still the video's are there (and there are more coming) to provoke and give thought, and if they do that then they have achieved the desired effect.
    N
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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com

    Nick,
    A robust debate where all the different perspectives are aired will help. There are so many variations on the general them of low to no out of pocket cash into a deal.
    In the US, way back around 1980, the term Nothing Down mean 0% to 5% cash in a deal from a specific investor. Maybe the deal was a JV where the other JV partner was putting up all the cash. Or maybe the loan terms were such that you could legitimately limit your cash contribution to under 5%. I did one where I received a gifted deposit from my grandmother and the lender was fine with a 95% LTV loan.
    More important than the exact level of cash in a deal is the stuff that happens once the deal is done. Many times the really low down payment deals imply a high LTV and very tight cash flow. Why take on a lot of deals if you cannot afford to hold on to them?
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.