[BIGINJAPAN]

(11-06-2012 07:54 AM)reaper23 Wrote:  

(11-04-2012 03:07 PM)BIGINJAPAN Wrote:  

(11-02-2012 05:20 PM)MikeCF Wrote:  

This is fraud, plain in simple.

But I've never met a criminal who wasn't smarter than every federal agent and lawyer out there - in his own mind, anyway.

What part is fraud exactly ?

among other parts:

"Sometimes different paperwork is required and I have to pay some photoshop experts. Because I am basically retired and don't have traditional income from a job or commission cheques I have my own made up. I will go so far to recreate job letter, paycheques, bank statements, notice of assessments, basically whatever the bank wants to see. That can cost me another 2000 or up to 5000 if I am financing the purchase of a company or a big project."


Are you even serious trying to act like this isn't fraud?

You even said it was fraud.

Why the front?

Why are we even discussing this?

Hey guys, I've got a great idea for a way to make money! You just go up to people and smash them in face and take their shit! It works! You won't even get arrested all that often because if you can run fast you'll get away!

Did you read everything else I wrote ? In that instance above I am describing what I do because I don't have traditional income and I am very aware of what I am doing.

But as for the rest of the posts there is nothing illegal or fraudulent about it. As much as you want to rant and rave it is, you are wrong. Which is fine, most succesful people don't understand the inner workings of a bank. I am working with in the guidelines that are set out by the banks. That is why it isn't fraud and why someone cannot be prosecuted. You can not believe it all you want but the fact is you are wrong.

I have exchanged a few emails with broker friends of mine in the US and there are some differences now. They are getting me as much info as possible to figure out if this is still doable in the US. So far it looks like it would be, but with a lot more restrictions.

[Black Quixote]

If you're feeling generous as you have been and not detered. Tell us about the u.s., lawyer handling, and how to pick properties and finance businesses.

[BIGINJAPAN]

Ok, finally got time to write up about the lawyers.

So first off when working with a lawyer keep in mind on the buying side the lawyer also represents the bank. So he or she doesn't have your complete best interest at heart.

There are basically 3 ways to secure your money from the extra coming out of the mortgage.

1. Direction to pay or commission agreement or builder rebate. As far as I know there is no law in Canada or the US the dictates a cap on commissions paid on a sale. For sure in Canada anyways you can charge as much as you want. Let's say you got the mortgage lined up and you are receiving $250,000 but purchased the house for $200,000. So what you do is have the seller sign what is called a direction to pay. It is a very common practice and basically the agreement stipulates that the sellers lawyer is directed to pay everything above $200,000 to whoever or or whatever company you want. Why you need this is, you want to keep the extra cash out of the sellers hand because you might have a hard time getting it out of him if left to do it on his own. This way he never touches the money and a separate cheque will be waiting for you. Basically you combine this with a commission agreement. You write up a commission agreement saying you are receiving $50,000 for selling his house. You then sign up a direction to pay as well so the lawyer knows where to disperse the money.
If buying the house directly from the builder you can just claim the cash back as a rebate. Doing it as a rebate means you don't have to pay tax on it at all because it is not income. Where as the above example would be considered income therefore taxes will be levied. The builder will have all the paperwork necessary to write up the rebate.

2. The above examples work well if you are buying someones principal residence. But if they are selling you an investment property or vacation property the seller will be concerned about capital gains. If you go back to our above example and use the same numbers the seller would be looking at a capital gain on $250,000 instead of $200,000. So of course they will be hesitant to do a direction to pay. So that is where we use a SKIP THRU TRANSER. This is a little more complicated and requires 3 lawyers instead of 2. How it works is you use a company you own as well as yourself. You have one contract for the seller and the company. He agrees to sell the above property to you for $200,000. His lawyer gets that contract and your lawyer for the company gets that contract. Then you write up a contract from the company to you personally. That will be for $250,000. That contract goes to your personal lawyer and to the lawyer handling the company contract. So the lawyer handling the company has 2 contracts to work on. Then lastly you still have to have a contract between you personally and the seller for $250,000. That contract goes to the bank and to your personal lawyer. Now how it all comes together is this: Bank funds the deal and sends $250,000 to your personal lawyer. He then sends the $250,000 to the middle lawyer. The middle lawyer takes off the $50,000 and cuts a cheque to your company for $50,000. He then forwards the $200,000 off to the sellers lawyer. In the meantime there is a title transfer going on. The sellers lawyer will discharge the title and everything is completely removed so it is blank. The title then goes directly to your personal lawyer and you are put on the title. Why this works and is completely legal is because the title didn't change into the company first then to you, the lawyer does not have to disclose to the bank. Most banks require if there is a title change within the last 3 months they need to be notified.

3. If there has been a title change or if the sellers lawyer specifies it wants the title to go into the company first then you have to do what is called a SKIP TRANSFER. Basically everything stays the same except the title goes from seller to company then to personal buyer. Takes a few days longer to make this happen and cost a little more money. But now the bank will need to be told what is going on because of a title change happening right before the mortgage is being funded. So what I do is sign joint venture agreement with my company and the owner of the property. Where we specify the need for the title change is for tax purposes. Which it really is. The corporate rate vs personal rate is vastly lower in Canada. We send this agreement and a one page letter to the bank so everything is disclosed.

I have several different lawyers I use. Some lawyers have really good reputations with financial institutions. I like to use which ever lawyer has a good rep with whatever bank I am getting the mortgage from. Makes the process so much quicker. A lot of time the bank will release funds sooner then waiting for all due diligence to be completed because they know the lawyer will take care of it on his own. Also I find it is important to spoil your lawyer. I take mine out for drinks or dinner or some sort tickets to a sporting event. Closing big deals can be hectic and the lawyer is more likely to answer your call instead of letting it go to voicemail if he likes you. Also very important to spoil the assistants. They do all the real work anyways. So get in good with them. I have most of their personal cell numbers and I can get a hold of them evenings or weekends if need be. Not to mention I have come across a few hot ones in my day that I end up banging. Win win really.

[Pepini]

If you switch "bank" by "foreign buyer", I´ve seen this happening at least one time per month. The usual term for this is making an "overprice". In my opinion it´s fraud. But, a minor one.

[BIGINJAPAN]

How is it fraud if the lending institution is determing the price of the asset ?

[Black Quixote]

First of all thanks for this, it's interesting.

A few more questions though:
-If you are making a company for this purpose, what would you recommend for incorporation?
-If someone were to pursue this as a business, are there any special licenses needed?
-What tool do you use to calculate the bank's price aka the worth of the house versus the listed price accurately?
-How would one go about finding out the limitations in the U.S., only method is ask a lawyer?

Thanks

[Pepini]

I´ve just read carefully your posts. Thanks for the detail.

Why do you need two contracts with the seller? Why not just one of $250.000,00 and you create a real estate company that charge the seller 20% comission agreement? Is it because of the VAT? The bank doesn´t need to know.

With foreigners, normally escrow accounts are used, but in this case it´s imposible.

And BTW sellers willing to do this are easy to find. I think they worry most about capital gains taxation. Any real estate agency has them.

I´m still inclined to believe that you are deceiving the bank. You´ve said it yourself: Some of things I will talk about are pretty much outright fraud. Banks will not be hurt by this.

[BIGINJAPAN]

(11-15-2012 01:40 PM)Black Quixote Wrote:  

First of all thanks for this, it's interesting.

A few more questions though:
-If you are making a company for this purpose, what would you recommend for incorporation?
-If someone were to pursue this as a business, are there any special licenses needed?
-What tool do you use to calculate the bank's price aka the worth of the house versus the listed price accurately?
-How would one go about finding out the limitations in the U.S., only method is ask a lawyer?

Thanks

I just use limited or incorporated companies. No license is required. To determine the price I use the MLS system. I can tell by the sales in the given community what the bank will most likely accept.

I am still working with my friends in San Diego to determine what exactly will work in the US right now. Things have changed a lot down there in the past 3 or 4 years. Which is rather amusing, since it is the big banks, lenders and insurers who created the problem and lost a trillion dollars or more and they tighten the rules up on the buyers.

[BIGINJAPAN]

(11-15-2012 03:39 PM)Pepini Wrote:  

I´ve just read carefully your posts. Thanks for the detail.

Why do you need two contracts with the seller? Why not just one of $250.000,00 and you create a real estate company that charge the seller 20% comission agreement? Is it because of the VAT? The bank doesn´t need to know.

With foreigners, normally escrow accounts are used, but in this case it´s imposible.

And BTW sellers willing to do this are easy to find. I think they worry most about capital gains taxation. Any real estate agency has them.

I´m still inclined to believe that you are deceiving the bank. You´ve said it yourself: Some of things I will talk about are pretty much outright fraud. Banks will not be hurt by this.

If you have a seller who is selling his principal residence you only need one contract and then yes you just write up a commission agreement. Sorry if I said 2 above, I may have been losing track with everything I wrote.

As for deceiving the bank I haven't gotten into that part at all. Everything mentioned above is legit where I am based. The deceiving part is when it comes to employment or providing proof of downpayment. I will cover that this week.

[Black Quixote]

(11-19-2012 02:33 PM)BIGINJAPAN Wrote:  

(11-15-2012 03:39 PM)Pepini Wrote:  

I´ve just read carefully your posts. Thanks for the detail.

Why do you need two contracts with the seller? Why not just one of $250.000,00 and you create a real estate company that charge the seller 20% comission agreement? Is it because of the VAT? The bank doesn´t need to know.

With foreigners, normally escrow accounts are used, but in this case it´s imposible.

And BTW sellers willing to do this are easy to find. I think they worry most about capital gains taxation. Any real estate agency has them.

I´m still inclined to believe that you are deceiving the bank. You´ve said it yourself: Some of things I will talk about are pretty much outright fraud. Banks will not be hurt by this.

If you have a seller who is selling his principal residence you only need one contract and then yes you just write up a commission agreement. Sorry if I said 2 above, I may have been losing track with everything I wrote.

As for deceiving the bank I haven't gotten into that part at all. Everything mentioned above is legit where I am based. The deceiving part is when it comes to employment or providing proof of downpayment. I will cover that this week.

Any word? This has been one of the most interesting threads Ive read here