Who knew we would be bigger and better and still going strong 10
years later. A personal thanks to all the current and past Board Members
and volunteers of all types who make this great association run smoothly!!!
We are all volunteers and it takes a lot of time and dedication to make
things happen.

Without teamwork from volunteers, the association would have
died a long time ago. Congratulations to Upstate CREIA!!! Join us Monday
for some Strossner’s Birthday cake! Networking 6-7pm and meeting 7-9pm at Embassy Suites in the ballroom in back of the atrium (our normal space).

Tim Joiner, owner of Dynamic Technology Solutions, Inc, and RE investor,
will promote his upcoming computer seminar to be held on Sat., June 9
8:30-4:30 at Embassy Suites. Topics will include how to utilize Excel I and
II, Basic PC Maintenance to keep your computer running fast, and Technology and Productivity. Tim spoke at UCREIA last summer and was very well received on the technology side of our business. Plan to sign up for his class online. Save $10 when signing up online in advance vs. paying at the door that day. www.upstatecreia.com to sign up.

Monday’s meeting will be a different format. Afterwards, let me know if you
liked it or not. It will be in a round table type format with 5 different
speakers/facilitators in 5 areas of the room with 5 different topics.
Audience will be divided up and will go to each round table area for 20
minutes to hear that topic, then switch to a different topic. Everyone will
get to hear each topic. This will introduce you to topics that perhaps you
have not learned much about, been less confident in, been afraid of or
whatever. A good learning opportunity.

Topics and speakers include:
1. Current issues with mortgage and refi transactions, strategies for
selling in this market, current purchase market, etc with Mark Wells,
Preferred Financial Services, Inc.

2. Mobile Homes–getting comps, info on moving MHs, chattel vs land/home packages, why they are cash cows, etc with Bill Clark, “MH King” of UCREIA, and VP of UCREIA

3. Entry Level commercial investing with John Keller, long time commercial
investor and lead volunteer for UCREIA membership committee

4. How to educate wholesale buyers, so-tailing financing, etc with Susanne
Lueck, wholesaler and UCREIA Assistant Vendor Coordinator and new Volunteer Coordinator
5. Property Tax reduction strategies with Carl Hensley, Protax Advisors of
America, a UCREIA vendor

See you Monday night. Bring a friend. Get some FREE items from our lending library (older items/materials that may still have some nuggets for you to learn).

Karla Kuhn
Dir. of Educ

There’s a link to a new video on the clubs website about market cycles, check it out this video on the clubs site.

http://www.UCREIAcalls.com

Here’s the scoop:

Housing cycles can tell you 3 important things:

1. What markets are best to invest in (both
local-sub markets and other national markets)

2. When to SELL fast and get out of a market
before the bottom falls out.

3. What investing strategy to use based on the
current market condition.

Harvard MBA / CPA, and Mega Investor Ken Wade is
the leading authority on this and has
sophisticated data dating back years.

If you want to stop investing blindfolded and
know the market cycles a little better, check out
this video on the clubs site.

http://www.UCREIAcalls.com

Enjoy!

Norm Reid

More success stories, including wholesale deals, a 4000 sq ft brick 2 story house move, bankers refinancing investor properties, etc! it is great to see our members standing up to speak of their local successes! Congrats to you all.
Bruce Bachtel spoke about the Greenville County Revitalization Awards
Committee that is taking nominations now for local rehab projects. Contact
Bruce more an application to nominate someone at bruce@agooddaytobuy.com.

Thanks to Marie Scopa who spoke for 20 minutes on the local successes she
and husband, Ralph, are having in this market. Buy low, sell for a little
higher, make some money on the deal and do it again. Thanks Marie! Norm
Reid, UCREIA President, spoke about networking and the importance and
usefulness of getting to know your fellow UCREIA members better. UCREIA
will offer more opportunities for networking outside of normal meeting
structures. Watch for details.

Thanks to Dean Storer, a founding member of the John Maxwell Coaching Group, who spoke about Goal Setting, Mindset, some stumbling blocks that keep you from achieving your goals. Most of those stumbling blocks are between your ears, not in your pocketbook or wallet, or the economies fault.

Dean will be teaching a 10 week Mastermind Group JUST FOR UCREIA MEMBERS on the famous book Think and Grow Rich by Napoleon Hill. See www.upstatecreia.com for more details. Plans are for the MMG to begin next Wed, April 25 9-10:30 am at the Holly Tree County Club, Hwy 14, Simpsonville. $199 per person, includes the Think and Grow Rich book and MMG workbook.

Sign up right away.

Mark your calendars for a computer seminar taught by past speaker, Tim
Joiner. Class will be Sat. June 9, 8:30-4:30. $59 members, $79 guests.
Plus $10 for spouse or someone living at your same address. $10 upcharge for walk ins at the door that morning. Watch our website soon for sign up forms.

Thanks again to all our vendors and Robert Dayton for presenting the vendors at the front of the room. Keep getting involved! Get educated! Network more! Have more fun and learn from each other! As always, remember to do your own homework and due diligence on any deal you are considering!

Karla Kuhn
Dir. of Educ.

The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.

Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).

Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.

The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.
If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.

According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.

In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.

The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.

“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”

Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.

We already had our first fun social of the year, curtsy of Andrew Kuharsky and his wife, at their dance studio. About 40 or so of you were there…fun stuff.

Greg Branham’s working on putting together a hiking trip. Susanne Luec, a fun day on the river doing some kayaking & canoeing and more to be announced.

We’ll probably plan a trip out for a night of baseball and maybe even a picnic at the lake.

 Be sure to join us!

There’s a couple reasons why we’re doing some of these fun, non real estate related activities.

1. Because we can. Its fun and people enjoy it
2. A lot of you have become friends with each other through this group and it only makes sense to expand on that into doing some fun stuff
3. And when you get right down to it, it’s a way for you to get to know others in the club on a more personal basis, and maybe even strike up some deals with each other, partner up with someone for private money, etc.

So, that’s why we’re doing it, and expect to hear more and more about these events in the coming weeks and months!

Norm Reid
President, UpstateCREIA 2012

This Monday, April 16, Embassy Suites Greenville.  Come between 6-7pm for networking with each other and vendors, purchase CDs of past meetings, talk up some deals.  Meeting is from 7-9pm.  Bruce Bachtel will tell us about Greenville’s Revitalization Award applications for this year.

NOTE:  the past 2 years, a UCREIA member has won this award for incredible renovations on older homes!  Maybe you will be the next winner!  Marie Scopa, local UCREIA member, will share her big time successes she and husband, Ralph, have had over the past year.  Learn from a local that it CAN BE DONE right now in this market.

Dean Storer, founding member of the John Maxwell Group, will share with us the mindset for success, goal setting and actually achieving your goals.  See below for more info on his talk.  Dean and Upstate CREIA are sponsoring a special 10 week Mastermind Group series on the famous book by Napoleon Hill, Think and Grow Rich.

Go to www.upstatecreia.com for more info on the MMG and sign up info.  $199 for the 10 week series, starting next Wed. April 25, 9-10:30am.

See you Monday night!  We will be celebrating 10 years of Upstate CREIA at the May 21 meeting. BE SURE TO JOIN US THAT NIGHT AS WELL.

Karla Kuhn

Dir. of Educ

If you thought setting up an LLC absolved you of individual liability, think again.The South Carolina Supreme Court?s recent decision in 16 Jade Street, LLC v. R. Design Construction Co., LLC found that the Limited Liability Company Act (the “Act”) does not shield an LLC member from liability for his own torts, but rather protects only non-tortfeasor members from vicarious liability.

In this case, Carl Aten and his wife were the sole members of R. Design Construction Co., LLC (“R. Design”), a South Carolina LLC, acting as general contractor for a construction project in Beaufort, South Carolina.After defects were discovered and one subcontractor left the project over a payment dispute, the construction ground to a halt.R. Design abandoned the project, never replacing the subcontractor nor adequately addressing the more than sixty defects.At trial, the court awarded the plaintiff $925,556 in damages, finding R. Design and the subcontractor liable, as well as finding Aten personally liable for negligence.

On appeal, the South Carolina Supreme Court analyzed Section 33-44-303 of the South Carolina Code of Laws which basically provides that the liabilities of the LLC are solely the liabilities of the company, and a member or manager is not personally liable for them solely by reason of being a member or manager.

The court acknowledged that the plain language of the statute suggests a member is shielded from individual liability for torts committed in furtherance of the LLC.After all, as the court admits, Section 33-44-303(a) provides that obligations arising in tort are “solely” those of the company.A footnote further points out that because Section 33-44-303(c) expressly provides how a member can become personally liable, “it therefore stands to reason that the general rule is he is not otherwise personally liable.”

Nevertheless, the court finds that the “right to sue one?s tortfeasor” is a “long-standing right” in our legal system, and the General Assembly did not intend for “such a sweeping liability shield” as insulating members of LLCs from personal liability.

For support, the court notes that its holding is consistent with the interpretation by a majority of courts across the country and references statutory comments which provide that a member is responsible for acts or omissions to the extent those actions would be actionable in tort against the member if that person were acting in an individual capacity.The court further highlights the parallel between LLCs and corporations noting that a shareholder of a corporation is not personally liable for the acts of the corporation except that he may become personally liable by reason of his own acts or conduct. 

The opinion concludes by expressing trepidation over its decision.The court?s concern is particularly acute in the case of a single member LLC because, as the court notes, “one cannot be vicariously liable for his own actions.”The short and simple dissent by Justice Beatty, joined in by Chief Justice Toal, would not have found the member individually liable and emphasizes the that the court should not re-write a statute if it is clear and unambiguous.

So what does this mean for you?Unless revisited by the South Carolina Supreme Court or addressed by the General Assembly through legislation, this decision makes clear that an individual may be liable for his own torts regardless of whether they are committed in furtherance of LLC business.To discuss this decision?s impact on your business and other ideas to minimize personal exposure, we encourage you to give one of our lawyers a call if you have any questions or if we could be of any assistance to you.

Provided by: Gallivan, White & Boyd, P.A Attorneys at Law, Greenville SC

In light of the large volume of distressed residential properties and the indications of higher demand for rental housing in many markets, some banking organizations may choose to make greater use of rental activities in their disposition strategies than in the past.  This policy statement reminds banking organizations and examiners that the Federal Reserve’s regulations and policies permit the rental of residential other real estate owned (OREO) properties to third- party tenants as part of an orderly disposition strategy within statutory and regulatory limits.

1. This policy statement applies to state member banks, bank holding companies, nonbank subsidiaries of bank holding companies, savings and loan holding companies, non-thrift subsidiaries of savings and loan holding companies, and U.S. branches and agencies of foreign banking organizations (collectively, banking organizations).

2. The general policy of the Federal Reserve is that banking organizations should make good-faith efforts to dispose of OREO properties at the earliest practicable date.  Consistent with this policy, in light of the extraordinary market conditions that currently prevail, banking organizations may rent residential OREO properties (within statutory and regulatory holding- period limits) without having to demonstrate continuous active marketing of the property, provided that suitable policies and procedures are followed.  Under these conditions and circumstances, banking organizations would not contravene supervisory expectations that they show “good-faith efforts” to dispose of OREO by renting the property within the applicable holding period.  Moreover, to the extent that OREO rental properties meet the definition of community development under the Community Reinvestment Act (CRA) regulations, they would receive favorable CRA consideration.

3. In all respects, banking organizations that rent OREO properties are expected to comply with all applicable federal, state, and local statutes and regulations.

Background
Home prices have been under considerable downward pressure since the financial crisis began, in part due to the large volume of houses for sale by creditors, whether acquired through foreclosure or voluntary surrender of the property by a seriously delinquent borrower (distressed sales).  Creditors, in turn, often seek to liquidate their inventories of such properties quickly. Since 2008, it is estimated that millions of residential properties have passed through lender inventories. These distressed sales represent a significant proportion of all home sales transactions, despite some ebb and flow, and thus are a contributing element to the downward pressure on home prices. With mortgage delinquency rates remaining stubbornly high, the continued inflow of new real estate owned properties to the market–expected to be millions more over the coming years–will continue to weigh on house prices for some time.4
Banking organizations include their holdings of such properties in OREO on regulatory reports and other financial statements.5  Existing federal and state laws and regulations limit the amount of time banking organizations may hold OREO property.6   In addition, there are established supervisory expectations for management of OREO properties and the nature of the efforts banking organizations should make to dispose of these properties during that period.
Risk Management Considerations for Residential OREO Property Rentals

In all circumstances, the Federal Reserve expects a banking organization considering such rentals to evaluate the overall costs, benefits, and risks of renting. The banking organization’s decision to rent OREO might depend significantly on the condition of individual properties, local market conditions for rental and owner-occupied housing, and its capacity to engage in rental activity in a safe and sound manner and consistent with applicable laws and regulations.

Banking organizations should have an operational framework for their residential OREO rental activities that is appropriate to the extent to which they rent OREO properties. In general, banking organizations with relatively small holdings of residential OREO properties–fewer than 50 individual properties rented or available for rent–should use a framework that appropriately records the organizations’ rental decisions and transactions as they take place, preserves key documents, and is otherwise sufficient to safeguard and manage the individual OREO assets.7   In contrast, banking organizations with large inventories of residential OREO properties8– 50 or more individual properties available for rent or rented–should utilize a framework that systematically documents how they meet the supervisory expectations described in the next section.  All banking organizations that rent OREO properties, irrespective of the size of their holdings, should adhere to the guidance set forth in this section.

Compliance with maximum OREO holding-period requirements

Banking organizations should pursue a clear and credible approach for ultimate sale of the rental OREO property within the applicable holding-period limitations.  Exit strategies in some cases may include special transaction features to facilitate the sale of OREO, potentially including prudent use of seller-assisted financing or rent-to-own arrangements with tenants.
Compliance with landlord-tenant and other associated requirements.

Banking organizations’ residential property rental activities are expected to comply with all applicable federal, state, and local laws and regulations, including: landlord-tenant laws; landlord licensing or registration requirements; property maintenance standards; eviction protections (such as under the Protecting Tenants at Foreclosure Act); protections under the Servicemembers Civil Relief Act;9 and anti-discrimination laws, including the applicable provisions of the Fair Housing Act and the Americans with Disabilities Act. Prior to undertaking the rental of OREO properties, banking organizations should determine whether such activities are legally permissible under applicable laws, including state laws.  When applicable, banking organizations should review homeowner and condominium association bylaws and local zoning laws for prohibitions on renting a property. Banking organizations may use third-party vendors to manage properties but should provide necessary oversight to ensure that property managers fully understand and comply with these federal, state, and local requirements.
Other considerations

Banking organizations should account for OREO assets in accordance with generally accepted accounting principles and applicable regulatory reporting instructions.10  Banking organizations should also provide the appropriate classification treatment for their residential OREO holdings.  Residential OREO is typically treated as a substandard asset, as defined by the interagency classification guidelines.11  However, residential properties with leases in place and demonstrated cash flow from rental operations sufficient to generate a reasonable rate of return12 should generally not be classified.

Specific Expectations for Large-Scale Residential OREO Rentals

Banking organizations with large inventories of residential OREO properties that decide to engage in rental activities should have in place a documented rental strategy, including formal policies and procedures for OREO rental activities, and a documented operational framework. Policies and procedures should clearly describe how the banking organization will comply with all applicable laws and regulations.  Policies and procedures should include processes for determining whether the properties meet local building code requirements and are otherwise habitable, and whether improvements to the properties are needed in order to market them for rent.  In addition, policies and procedures should establish operational standards for the banking organization’s rental activities, including that adequate insurance policies are in place, that property and other tax obligations are met on a timely basis, and that expenditures on improvements are appropriate to the value of the property and to prevailing norms in the local market.

Policies and procedures should also require plans for rental of residential OREO properties, down to the individual property level, that cover the full holding period from the time the bank received title to ultimate sale by the bank.  Plans should identify which properties would be eligible for rental.  Plans also should establish criteria by which properties are chosen for marketing as rental properties, and the process by which rental decisions should be made and implemented.  Plans should describe the general conditions under which the organization believes a rental approach is likely to be successful, including appropriate consideration of rental market and economic conditions in respective local markets.
Finally, policies and procedures should address all risk management issues that arise in renting residential OREO properties.  Some risk elements parallel those found in other banking activities, for example, the credit risk associated with tenants’ potential failure to make timely rent payments, or potential conflict of interest issues such as the use of a firm by a banking organization to both provide information on a property’s value and list that property for sale on behalf of the banking organization.

Other risks unique to such rental include:
- Dealing with vacancy, marketing, and re-rental of previously occupied properties;13
- Liability risk arising from rental activities, along with the use and management of liability insurance or other approaches to mitigate that liability and risk; and
- Legal requirements arising from the potential need to take action against tenants for rent delinquency, potentially including eviction. Such requirements may include notice periods.
Banking organizations may need to develop new policies and risk management processes to address properly these categories of risk.

In many cases, banking organizations will use third-party vendors (for example, real estate agents or professional property managers) to manage their OREO properties.  Policies and procedures should provide that such individuals or organizations have appropriate expertise in property management, be in sound financial condition, and have a good track record in managing similar properties.  Policies and procedures should also call for contracts with such vendors to carry appropriate terms and provide, among other key elements, for adequate management information systems and reporting to the banking organization, including rent rolls (along with actual lease agreements), maintenance logs, and security deposits and charges to these deposits. Banking organizations should provide for adequate oversight of vendors.14

The FHA is notorious for relatively easy borrowing requirements, but if you have an ongoing credit dispute of $1,000 or more on your file and do not have the wherewithal to enter an FHA-determined payment plan or pay off the balance entirely, you won’t have a shot at an FHA loan any time soon.

Starting April 1 of this year, the FHA will no longer be insuring mortgages to borrowers who have ongoing disputes totaling $1,000 or more – and two years old or younger – on their files[1]. If your file contains older disputed credit accounts or reported identity theft, you can still qualify for an FHA loan. Also, borrowers willing to pay off the balance of the credit dispute or make at least three payments on a payment plan can still qualify for FHA loans as well.

The move is intended to protect the FHA emergency fund, which fell below mandated amounts last year. It is part of the “sweeping changes” that the FHA has been implementing in order to avoid a taxpayer bailout, something that many analysts believe is inevitable and FHA officials insist is nothing more than a “myth”[2]. FHA loan originations could decline by 33 to 50 percent this year as a result of the change, which is likely to “kick some buyers out of the marketplace,” as one consultant describes it.

Given that the FHA reports finding that “many borrowers with mortgage payment delinquencies had prior credit deficiencies, including unpaid collections and unresolved disputed accounts prior to the approval of their loan[s],” do you think that “kicking out” these buyers might be a good idea for the FHA?

The Bryan Ellis Investing Letter!