Legislators have but one purpose. They legislate—sometimes well, sometimes harmfully. Please help stop some really harmful legislation from becoming law.
Photo by Kumar Appaiah
In all the time I’ve been writing this blog—can you believe it has been going since October of 2015? Time flies—I’ve never asked you to directly contribute money to anything except the charity of your choice. I wouldn’t do so now if the cause wasn’t so important.
A few weeks ago, I wrote about a series of bills before the Texas Senate that have the potential to ruin a lot of lives in the name of protecting people from unscrupulous “owner financiers.” The bills attempt to protect innocent buyers from being defrauded by these owner financiers who collect payment on a wraparound mortgage (wrap) but fail to make the payments on the underlying mortgage, causing the wrap buyers to lose a house to foreclosure when they were making the payments.
We all agree this behavior constitutes fraud and should be prevented and punished when it occurs.
The problem is that three otherwise well-meaning Texas Senators have written bills that make wraps illegal. That’s a bad thing because it severely limits the number of people honest investors and redevelopers can help. First, the bills make it more difficult to buy some properties at prices the sellers need by driving up the cost of money unnecessarily. Second, they make it harder to sell the properties, especially to people with less than perfect credit.
Let me put that last sentence into perspective. I don’t want to brag, but I’m what a lot of people would call rich. I have a lot of hard assets. I have decent income. I have a respectable credit score. I own or partner in several real estate business. I also have trouble getting a traditional mortgage on properties I want to purchase, as do many self-employed people.
We purchased this house with a wrap because it reduced our costs enough to offer the homeowners, who needed to move quickly and didn’t want to handle the renovation themselves, the price they wanted. Both notes were paid off a few months later when we closed on the sale after renovation. This transaction helped two families.
If I have trouble securing a traditional mortgage, what about people with credit scores that fall below the median? Don’t they have a right to purchase a home if they want and they can find someone willing to take a risk on them? SB 1994 would reduce the number of people I can help buy a home from hundreds to exactly two. It would also mean we could not offer as many homeowners the price they need to sell their houses to us when they don’t want to renovate the house themselves.
As I stated earlier in this series, I support two of the bills (SB 880 and SB 1995). These two bills alone could solve the problem Kirk Watson and crew set out to solve. SB 1993 and SB 1994 are like using a sledge hammer to pound out the fender well on your car after a fender bender. They will hurt the people they intend to protect and could wreak havoc on the economy by forcing more people into foreclosure.
I’ve joined forces with a group of investors who have organized to fight this legislation. We hired a lobbyist, and things seemed to be going well. We actually thought the Senators would actually listen. Then last night I learned of two new developments:
- The banking lobby got involved and threw their weight behind the most onerous provisions of the bill.
We can trust Big Banks to screw the little guy every time. It’s like they want more foreclosures. Maybe they do. - One of the Senators—I don’t know which one—realized that the changes we wanted would eliminate his name from any legislation put forward this session.
Our contact in the capitol reports, “And it’s very important to him that his name is on at least one law this session.” Scorpions gotta sting and Senators gotta legislate.
So now our efforts have transformed from working with the the Senate to make the best legislation possible to an outright effort to kill the bills, especially SB 1994. Toward that goal, I ask your help. Won’t you take time out of your busy day to do to things?
- Contact your legislators to express your opposition to the bills you oppose, especially SB 1994.
If you’re an investor, it would be helpful if you include stories of how you’ve helped save folks from foreclosure or helped families into safe, secure homes using wraps. You can find an example letter here. - Help us raise money to fight the legislation by contributing via the Go Fund Me page, sharing this article, or both.
Thank you for helping us help others.
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