Uncle Sam is (almost) always your “silent partner” on the “back-end” of a successful real estate deal: He always wants his taxable share of the profit generated by your hard work.
Would you like to change the equation just a little and have Uncle Sam be your money partner near the “front-end” of your deal, and not just at the end?
Yes, I know most real estate investors usually don’t want this particular Uncle to be anywhere near their deals. And I don’t blame them. But wait! Don’t stop reading just yet. It’s not so much that Uncle Sam wants to help you do deals; rather, if you’re a Note Investor, he wants to help your homeowners, you know, the good folks who own the homes that are secured by your Notes. You, my friend, are just an unintended beneficiary of your good Uncle’s largesse.
What am I talking about? I’m talking about the Hardest Hit Fund.
According to the Department of the Treasury, Hardest Hit Fund (HHF) is a component of the “Troubled Asset Relief Program [TARP], [which was] created to implement programs to stabilize the financial system during the financial crisis of 2008. [TARP] was authorized by Congress through the Emergency Economic Stabilization Act of 2008 (EESA) and is overseen by the Office of Financial Stability at the U.S. Department of the Treasury.”
“First announced in February 2010, the Hardest Hit Fund provides $7.6 billion to the 18 hardest hit states, plus the District of Columbia, to develop locally-tailored programs to assist struggling homeowners in their communities. On February 19, 2016, an additional $2 billion was allocated to HHF as a part of the Consolidated Appropriations Act, 2016. The total HHF allocation is now $9.6 billion.” (Emphasis added.)
“HHF programs are designed and administered by each state’s Housing Finance Agency (HFA). Most of these programs are aimed at helping unemployed homeowners remain in their homes while they search for new employment and those who owe more on their mortgage than their home is worth.”
“State HFAs have until the end of 2020 to utilize funds allocated under HHF.”
What does all this mean for the Note Investor? It means, quite simply that an additional $2.2 billion was just added to the $7.2 billion which was previously allocated — for a total of $9.6 billion (much of which has not been used) — that Uncle Sam wants to give to Note Investors just like you!
Let’s look at an example:
A single family home, located in Tennessee.
Current Market Value (CMV) of the property: $23,000
Unpaid property taxes: $3,000
First position mortgage note.
Unpaid Principal Balance (UPB): $62,000 (Yes, this house is really “upside down.”)
Cost to purchase the Note: $8,000
Hardest Hit Fund Payments Which Benefit Investor:
Delinquent property taxes (paid to County): $3,000
Property insurance: $785
Hardest Hit Funds Paid Directly to Investor:
3+ years of arrears: $26,600
18 months of future mortgage payments: $10,726
Total HHF Paid Directly to Investor: $37,326
AFTER 18 MONTHS, THE INVESTOR WILL STILL OWN THE NOTE, THE VALUE OF WHICH WILL BE THE UNPAID PRINCIPAL BALANCE OWING AT THAT TIME, TAKING INTO CONSIDERATION THE REDUCTION OF PRINCIPAL ATTRIBUTABLE TO PAYMENTS.
Not a bad return on an $8,000.00 investment!!!!
Hardest Hit Fund States
Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Washington, D.C.
This communication is not, and shall not under any circumstance or for any purpose be considered as, an offer to sell any security or an offer to purchase any security. Nothing in this communication is, or is intended to be, legal, financial, or investment advice, nor is this communication intended to address the objectives or needs of any specific individual. If you require legal, financial, or investment advice, please consult your own attorney, accountant, financial advisor or planner, or other professional of your choosing.
Any historical performance data that may be contained in this communication is based on the information presently available to, and on the beliefs and assumptions of, the management at WeGetNotes.com, and does not guarantee future or any other results.
Any pro forma or other forward-looking projections that may be contained in this communication are based on current expectations, and are based on the information presently available to, and on the beliefs and assumptions of, the management at WeGetNotes.com.
Actual performance may be materially different from that which is expressed or forecasted.
The Note Company is a Texas-based national Real Estate Note Investment Firm that helps Private Lenders and other investors reposition investment capital from under-performing uses to investments that are secured by real estate.