For those of you not familiar with me,

my name is Jason Lucchesi (it’s

pronounced Lou-Casey). I currently

live in the Indianapolis, Indiana area

and have been in the real estate

business since 2002. I actually began

my career in the mortgage business.

I started off with a few local

mortgage brokerages, and at this

time in the mortgage business most

places didn’t really supply me or any

other “fresh fish” any real training to

become successful. I struggled for

quite a bit in the mortgage business.

At times I was working two jobs just to

keep with bills, car payment, food, etc. I began in the mortgage business

flourished when a recruiter called me out of the blue, and was to be interviewed

with a company Full Spectrum Lending, which was the subprime division of now-

infamous Countrywide Home Loans. I was hired by Countrywide in the late

summer of 2004, and within 30 days I began having great success! As a young

kid (I was in my early 20’s at the time), I was closing 7-10 (sometimes more)

loans every month. I truly loved life - at least I thought working 13-16 hour

days was loving life - and thought things couldn’t any better.

Within 12 months of becoming a loan officer, I was promoted into a

management position. At this time I was living in my hometown of Elgin, Illinois

 

(about 45 minutes north of Chicago), and when I received my promotion I

moved to Grand Rapids, Michigan to help a struggling branch get back on track.

It didn’t take long at all for me to work together with the branch employees to

figure out the problem, and we worked together as a team to get more loans

closed. Within 60 days of me coming into the branch we quickly went from

closing a mere 26 loans a month with 15 loan officers to 81 loans closed. I

wasn’t in Grand Rapids for too long to say the least. I was given another

promotion to help another struggling branch in Indianapolis, Indiana.

I thought life was grand at this point! I had a nice apartment, a really nice car,

my credit was stellar, I was putting 15% of my income into my 401k, I was

moving up the corporate ladder extremely fast (which was my goal at the time),

and I was helping out my Mother and Father with some of their expenses back

home. My so-called “dream life” came to a screeching halt when early 2007 our

then CEO made some negative comments in the news about the company. This

wasn’t good for the employees. Our stock was an all-time high of over $42, and

with the news it plummeted to around $12. Think about how this affected me…

I had been investing 15% of my income for the last four years, and every single

year I made at least $100,000 or more. The future that I was so tirelessly

building was now worth 71% LESS!!! I ended my career with Countrywide on

December 31, 2007. I did look back quite bit when I left, as I didn’t know where

to go. I thought I was going to be there until I retired. My life was a little hectic

at this point; I had just gotten married, and my first-born was due in April of

2008. I literally felt like a dump truck rolled over me, and then the driver looked

back, said “I don’t think we got him good enough!”

When I left countrywide I cashed out my 401k to help keep up with my bills. I

tried finding another job in any sales position available, but nobody wanted to

hire some kid without a college degree. I really didn’t know what to do at this

 

point. I was broke within 90 days, and didn’t want to ask Mom and Dad for help

(they didn’t have anything to help with, anyway). I kept my head held high

thought time for my wife’s sake. And in the second quarter of 2008 I started

investing full-time in real estate. It took me a little while to find my true passion,

which was in short sales, and since 2009 I’ve closed over 150+ short sales…

either buying them to quickly flip them for a profit or those cases in which my

company handled negotiations for other short sale investors in which we made a

profit.

In late 2010 I began diversifying my portfolio, and was investing in bank owned

properties and distressed assets in which I helped close 60+ note/bank owned

deals. I was in a position that a lot of Americans are in right now. What’s made

me successful has been the fact that I am always thinking “You can do this!!!”

Like you probably do now, I watched a LOT of webinars and thought “If these

guys can make money with real estate, and have all of this freedom to spend

time with their families, then I can to!” The fire in my belly was lit back up

again, and nothing was going to beat me down… I WAS GOING TO BE

SUCCESSFUL!  

 

Clint Keller, co-creator of the Asset

Manager Millions program, has been

actively investing in real estate since 2006.

Clint graduated Magna Cum Laude in 2008

with a Bachelor's degree in Finance from

the University of Southern Indiana. He has

been involved in over 100+ real estate

transactions and currently resides in

Evansville, IN as full-time real estate

investor and mentor. He has been involved in many diverse real estate

transactions, including but not limited to: short sales, bank REOs, government

owned properties, tax liens, tax deeds, contract sales, residential leases, and

residential lease options. Besides real estate, Clint is a health and fitness

enthusiast, and enjoys working out, cooking, playing sports, and spending time

with his friends and family. He accredits a majority of his success to his creative,

positive can-do attitude, and his network of friends and mentors who share the

same positive mindset as he does.

 

OVERVIEW OF HUD AND NAVIGATING THE LOOPHOLE.

First off, what is HUD? And what exactly is

the Loophole? Well, HUD stands for the US

Department of Housing and Urban

Development and it is the primary housing

and lending regulatory authority in the

United States. HUD is responsible for the

operations of the Federal Housing

Administration (FHA), which is the agency

that insures mortgage lenders against a

loss on FHA home loans. When an FHA borrower defaults on their mortgage, the

lender initiates the foreclosure process. HUD becomes the owner of the

properties after foreclosure is completed and after the lender has made a claim

against the FHA insurance fund for payment of the remaining balance of the

loan. What is an FHA loan you might ask? FHA loans are loans that are often

approved for borrowers whose credit scores fall as low as 580 and are designed

to help a greater number of potential buyers achieve the dream of owning their

own home. The low interest rates, smaller down payment figures and greater

leniency when it comes to credit scores are all strategies that the FHA uses to

help boost the country's home ownership rate. It is the largest insurer of

mortgages in the world, insuring over 34 million properties since its inception in

1934. The FHA and HUD have insured over 34 million home mortgages and

47,205 multifamily project mortgages since 1934. FHA currently has

approximately 4.8 million insured single-family mortgages and 13,000 insured

multifamily projects in its portfolio.

 

Opportunity!!! HUD has a vast amount of these loans that are currently going

into default and are being listed on the open market at staggering discounts,

especially in markets where there is higher than average unemployment. In this

eBook we will look at this opportunity in a little more detail discussing some of

the hidden opportunities that exist today as well as into the future, for those that

know about it, and more importantly act on the opportunity that is available for

the taking.

HUD wants to sell the property as quickly as possible and recover as much of the

claim amount as it can to replenish the FHA insurance fund. Since 1999, HUD

has hired Management and Marketing (M&M) Contractors, such as Hometelos,

HUD Pemco, & Ofori & Associates, to name just a few, to maintain and sell these

HUD-owned single-family residential properties. These contractors and asset

managers, following HUD guidelines, are responsible for all aspects of property

care and resale on behalf of HUD.

 

HUD has established four main listing periods that you should be aware of, and

pay very close attention to, as many properties can be snatched up if you know

what specifically to look for. The listing period is determined by several factors

including: the type of property being sold, the bid open date, and how long the

home has been on the market. These four listing periods are as follows:

Lottery (7 days):

All uninsured homes start in the Lottery period. The only insured homes

that start in the Lottery period are insured single-unit properties in a

revitalization area.

Exclusive (no investor bidding):

Insured properties (30 days): Insured properties not in a revitalization

area begin their listing periods here. For insured homes that are single-

unit properties in a revitalization area, the Exclusive period follows the

Lottery period. The next listing period is the Extended period.

Uninsured properties (5 days): All uninsured properties enter this 5-

day Exclusive period after the Lottery period. The next listing period is

the Extended period.

Extended (180 days listed):

This listing period ends after the property has been listed for a total of 180

days. The next listing period is the Dollar listing period for homes that

have an as-is appraisal value of $1 to $25,000. Those homes whose value

is zero dollars or greater than $25,000 dollars remain in what becomes an

open-ended Extended listing period.

 

Dollar (Government purchase only):

This listing period is ten (10) days and is for homes that have an as-is

appraisal value of $1 to $25,000. After the $1 listing period, the home enters

an Extended-listing period that has no ending date (except when the home

is purchased or reanalyzed). Government agencies can still purchase the

home for $1 after that home leaves the $1 listing period and enters the

Extended listing period.

IE = Insurable with repair escrow. This property requires repairs estimated

to cost no more than $5,000; it is eligible for an FHA-insured loan provided

the purchaser's lender sets up a repair escrow at closing.

IN = Insurable. This property is eligible for an FHA-insured loan in its current

condition.

 

UI = Uninsured. This property requires repairs estimated to cost more than

$5,000; it is not eligible for an FHA-insured loan, unless a Section 203(k)

loan can be arranged.

These listing periods are very important to understand, as HUD properties that

expire within a certain listing period are open for investor bidding, aka “Extended

Period” for those that know exactly when these listing periods end and begin.

Some of your biggest discounts HUD will accept come after the

property has been listed for 90 days on market. The days on market

figure can be determined by finding the listing date of the property

noted on the HUDHomestore.com site, and figuring how many days

from today’s current date that the property as been listed on the open

market.

If you are purchasing a home to live in as your primary residence, and

have not purchased a HUD home before, you can bid on properties

within the Exclusive period and pick up a great deal here as an owner

occupant!

 

1. Many real estate agents do not like selling them, because they either:

! Don’t understand the process

! Are not motivated by the limited commissions HUD sets

! Do not like filling out the vast amount of paperwork

! Don’t have buyers that can see past the minor or major repairs

needed so selling move in ready houses are more attractive to some

agents

2. There is little competition. Many buyers do not know about them or

simply cannot see past the minor or major repairs that will substantially

increase the property’s value. Although unethical, some agents do not list

the property on the local MLS and hide them from potential buyers

because they want both sides of the commission. The Hudhomestore.com

site will show all HUD properties available, but many buyers do not know

about this site, and do not know how to properly and efficiently navigate

the site for massive success.

3. No title seasoning. HUD properties can be sold immediately with no deed

restrictions! We will discuss several incredible exit strategies to help you

sell your properties lightning fast!

4. Listing / Value Errors: Often times, agents and or asset managers

representing HUD will input listing and or value errors on the

HUDhomestore.com site and or MLS listing. These errors can include

 

square footage, bedrooms, bathrooms, lots size, mapping location,

included appliances, and condition of property just to name a few. Those

that know how to look for these errors and more importantly, know how to

capitalize on them, will succeed in this business. We recommend

comparing the listing and HUD site information with your local county

assessor and or MLS, or more importantly, going out to view the property

in person (or hiring an agent to do so) to compare and contrast these

possible errors in person. In terms of value errors, it is very common that

the appraiser who performed the valuation on the property was an “out of

town” appraiser, and sometimes do not provide an accurate valuation of

the property. More times than not, the appraisers undervalue the

suggested list price of the property, which HUD sets initially to sell the

home for. These conservative values can be goldmines with built-in equity

right from the start.

5. Instant Equity. With the strategies in this eBook, you can be awarded

HUD properties for upwards of 80% off of list price! Many properties will

see discounts of 20% to 35% off of list price, which can be tens of

thousands of dollars in instant equity!

 

One very important thing to keep in mind is that HUD looks at their NET amount

that they receive on a closed transaction, meaning after closing costs,

commission, credits etc. When bidding on properties, use this to your

advantage. Under Extended Period, we have found that in most markets, HUD

will usually take 85% NET to HUD of the current list price. We never choose to

have HUD pay for any closing costs in the bidding process.

Use HUD’s designated closing agent to minimize title and closing costs

fees as HUD will pay a majority of the fees, including title insurance, if

you elect to use their title company. We usually discount the selling

commission slightly when submitting bids to show a willingness to

negotiate

 

HUD looks to really move the properties after the 90 DOM period. Your

biggest discounts will be obtained once the property has been listed on

the market for at least 90 days in most cases.

Last 2 digits of confirmation number will give you a very good indication of how

many bidders are bidding on that property. This number will indeed increase if

someone repeat bids or withdraws a bid.

We have found that HUD will generally offer bigger discounts on “Uninsured”

properties vs. Insured properties, as the “Uninsured” properties are perceived as

harder to sell as they need repairs and updates for them to qualify for

conventional and or FHA financing. Do to the fact that they are perceived as

harder to sell, can open up an incredible opportunity for investors to bid on these

properties, secure them at a great discount, and cash in big with several

different exit strategies.

 

Always choose the option to “Hold Offer as Backup Offer.” By choosing

this option, you will be first in line if another bidders bid, that is higher

than yours, does not go through with filling out the paperwork

properly, or simply does not fill it out correctly according to HUD’s

strict requirements. This happens all the time, so make absolute sure

you check this box to put yourself in the best position possible.

 

Bid your strongest on Thursday or Friday to take advantage of the weekend to

do your due diligence and get your paperwork into HUD. HUD requires that you

get your paperwork into them within 48 BUSINESS hours, which leaves you

Saturday and Sunday to do additional research on the property and get your

paperwork in accordingly.

We have found that HUD generally accepts offers at 11am and counters offers

around 3pm within the same time zone as the property being sold on the site

that you are bidding on.

 

" Look at Property Condition Report and Repair Escrow document to get a

very good indication of how nice the property is. These documents can be

found under the “Addendum” tab within the HUDHomestore.com site.

 

" Is the property in “Insured” or “Uninsured” status? Pay close attention to

this information and compare them to the property’s pictures. The pictures

do not tell the whole story, but comparing the pictures to the Property

Condition Report, Repair Escrow document, and property condition status

will give you a very good overall feel of the property’s condition. We also

recommend performing a Google street search or Google Earth search to

determine if property is in “war zone.” A war zone is an area with lower

income, high crime, with dilapidated buildings and properties that we

typically avoid, unless we are getting a property at a price that we cannot

simply pass up.

" Perform a county search on property to see any previous sold prices of the

property. In order to do this, determine the county the property is located

in, and perform a Google search for that county’s assessor site. Look

within the Property search field to research a particular property’s

information. We use county assessor sites to cross reference details about

the property’s structure, bedrooms, bathrooms, sqft, lot size, sold comps,

assessed value etc. as well. The county website can be a great tool for

 

referencing property information.

" Perform a search on Eppraisal.com, Zillow.com, and or REIBlackbook.com

to determine another opinion of value to increase your success and

minimize risk.

" Perform an MLS search on the property to pull similar sold comparable

properties and see previous sold prices.

You will want to double check the

property descriptions mentioned on the

HUDHomestore.com site for listing

errors. We have found that HUD makes

quite a few errors in improperly listing

properties on their site. These errors can

be huge opportunities for the savvy

observant investor!

Compare the Property Condition report

to what you see at the property. Pay

close attention to the main components

of the house, including: roof, foundation,

HVAC, AC unit, electrical panel,

plumbing pipes, and any visible mold.

Observe the neighborhood closely,

 

particularly the houses adjacent to the subject property you are interested in.

Drive the neighborhood and look for any nearby schools, parks, hospitals, that

may increase your property’s value and entice future buyers or tenants for your

property.

Ask neighbors about the house if they are outside. The neighbors will usually tell

you everything wrong with the house. Don’t be scared off by negativity though,

as neighbors will usually disclose to you nothing but negativity. Simply use this

information to your advantage, but do not be scared off by it. Pay close attention

to anything they mention that may be a major concern, including foundation

issues or Environmental issues with the property.

If you are a rookie investor, we recommend getting a home inspection done,

especially if price is substantial or you don’t feel comfortable moving forward

with your own observations and opinions.

Most home inspectors don’t warranty their inspection. If you have a

solid reputable contractor on your team, take them to the house. Pay

them for their time or simply use them for the needed repairs to the

property.

HUD will typically do a listing price reduction at 30, 60, 90 and 180 days on

market. The price reduction will usually be by 10% or $5,000. For example: A

property with a current list price of $50,000 will be reduced to $40,000 at 30

days on market or $45,000. (Usually depends on bidding activity.)

Sometimes, at the discretion of the asset manager or listing agent, HUD will

order a new appraisal on a property at the 90 days on market mark or later. HUD

 

will then list the property on the site for this new updated appraisal amount,

which is almost always a reduced price from the original list price. This 90 days

on market period and after, is when HUD really starts to push the property to

sell. Your biggest discounts will be secured after this pertinent DOM period!

Use HUD’s closing agent to save on closing fees etc. If you are performing an A

to B, B to C double closing, we recommend using your own investor approved

title company for both closings who understands the process, and whom can

save you on closing costs by handling both closings.

Most title companies will waive title insurance and or title search and

examination on one of the closings, especially if you start to send them

a lot of business! Find an investor friendly title company, interview

them and get them on your team immediately.

If the amount needed to fund the deal is over $10k, (In Indiana), the funds must

be wired to the title company. Check with your own state to see any specific

funding requirements. If the funding amount is below $10k, the funds can be

provided in the form of a cashiers check. Once you have sent in your paperwork

to HUD’s designated asset manager, and have a completed ratified sales

contract, we recommend scheduling your closing for a date approximately one

week before your contract deadline. We do this so that a HUD-1 Settlement

statement can be sent over for review so that fees, tax proration’s, commissions,

can be double checked so there are no last minute surprises before closing.

 

HUD requires notification at least 5 days prior to your scheduled

closing date. After closing, if you plan to hold on to the property, make

sure the listing agent marks house as SOLD in MLS, especially if your

exit strategy is to sell the property immediately to a cash or liquid

buyer. Listing agents often times forget to mark the property as sold,

and the listing will show up in online searches at the last list price.

Our typical initial bidding strategy for properties that are listed within the

Extended period is as follows (for properties that are 0 to 89 Days On Market):

2 Bedroom - 40% NET TO HUD

3 Bedroom - 50% NET TO HUD

4 Bedroom - 60% NET TO HUD

We always make sure to round up to the next $50.00 or so to make sure to have

the NET to HUD to be slightly over these percentage thresholds.

HUD may elect to accept, cancel, or counter your offer bids. If HUD counters any

offer at a NET to HUD of less than 70% - we take a closer look at the property!

If the deal makes sense at HUD’s counter offer, and money can be made, we

move on it. If not, we continue to bid on the property, usually in $50 increments,

up to the point that we feel comfortable that money can be made.

If a particular property has been listed for 90+ DOM.. we start to bid every

single day, increasing our offer usually in $50 increments, depending on how bad

we want the property.

 

In some instances, it is necessary to pay more than what HUD is asking for the

property, either via their list price, or via their counter offer to you. When comps

clearly show that the property can be wholesaled for a comfortable profit, when

you have a solid buyer lined up already (usually one who is willing to put down a

hard non refundable deposit or has provided a solid proof of funds letter), or you

simply know the market. We overbid list price on properties when the list price

comes in extremely conservative, which does happen quite often. We

recommend overbidding on the property slightly while discounting the selling

agent commission for best possible chances of winning the bid.

 

Within this eBook, we have unveiled the curtain on some of the incredible tips

and tricks we use in our own business to locate, qualify, and secure unbelievable

deals on HUD properties so that you can make a substantial amount of money.

We encourage you to take this knowledge and use it in your own business to

your full advantage. To purchase the full version of our Government Loophole

Magic online training course where you will learn step by step techniques that we

use to not only find unbelievable deals, but how to sell your properties lightning

fast, navigate the jungle of HUD’s paperwork, hire a virtual assistant to run the

entire business for you on autopilot, and find out how you can partner with us on

deals that we teach you how to find, visit www.getglm.com. If you have any

questions, feel free to contact us at getglm@gmail.com.

Thanks and Make it a GREAT day!

Clint Keller & Jason Lucchesi

Creators of Government Loophole Magic