Back in the good old days ? as recently as 2007 or so ? investors used to be able to buy and re-sell property the same day without ever having to bring funds to the closing table.? This was accomplished through a couple of different methods, such as the simultaneous closing or use of a land trust.

There is still a wonderful method called an assignment of contract which can be used to accomplish the same thing.? However, there are situations where an assignment is not acceptable.? For instance, any time a bank is involved, be it a short sale or a bank-owned property, the bank is not going to approve the HUD-1 with an assignment fee on there.

Let me back up a moment and explain why the simultaneous closing and land trust are no longer viable methods in many cases.? Keep in mind that this will vary tremendously based on the accepted practices of the state in which you invest.? Many banks and title companies used to accept these methods without blinking an eye, so to speak.? But, the crash of the real estate market has brought with it increased scrutiny from federal and state regulators.? Therefore, many title companies will no longer perform simultaneous closings or closings using a land trust.

Again, the situation will vary state-to-state, but sufficed to say, many investors are having issues trying to flip properties through a simultaneous closing or land trust.? In order to solve this problem, a new type of lender has emerged:? the transactional lender.

A transactional lender is one who lends funds for a very specific purpose ? to allow the investor to purchase the property so that it may then be re-sold quickly.? Transactional lenders differ from hard money lenders in that they will not lend money for months or years to allow fix-up of the property.? They are only lending for typically 1 day so that the investor can buy and then re-sell the property.? The transactional lender will be paid off on the re-sale.

Transactional lenders will typically be less expensive than hard money lenders.? You can expect to pay somewhere around 2 pts. (or 2% of purchase price), plus possibly an administrative fee of around $500.

Finding these lenders is as simple as typing ?transactional funding/lending? into your favorite search engine.? Lenders love to do these types of loans because they are paid quickly, and when they?re lending on dozens of deals per month, their profits add up fast.

The best part about using a transactional lender is they will not require you to use any of your own money!? Unlike a traditional hard money lender, since they are only lending money for 1 day, they do not feel the need for the investor to contribute a down payment.

One major short sale concern of the bank is investing the time and effort in arranging a short sale then having the buyer not close on the short sale. Due to this possibility you can expect the bank to ask for a “Proof of Funds Letter” or a “Mortgage Commitment Letter” as a needed part of the short sale package.

This request is often a major hindrance for investors that are flipping the deal with what is regarded as a double closing or simultaneous closing. What are yourr options?

Here are a few possible (remedies|solutions} for the needed proof of funds letter:

-Bank Statement. If you have the funds available send the bank a recent bank statement as your “proof of funds letter”.

-Obtain a Proof of Funds Letter. This letter can be acquired from your bank, mortgage broker, non-public hard funds provider, or anyone which has the power to provide transaction funding.

-Mortgage Commitment Letter. I am not a fan of the Mortgage Commitment Letter because a bank issues a loan commitment after it has approved both the house and you. The home appraisal must meet the bank’s rules and the bank may need the real estate be in a better condition then the current state of the property. For that I feel a commitment letter is better suited for purchasing houses that don’t involve a short sale.

-Home Equity line ( HELOC ). If you have available equity in a property a HELOC on the home can serve you well. First, there is no charges on most HELOC for unused lines of credit. Second, it meets the banks suggestions for proof of funds letter even if these are not the funds you intend on closing with.

The bottom line is unless you have a longtime relationship with the bank it’s likely you will have to show evidence of funds in some manner. If you are new with some resources, find a good hard funds provider to work with and they can supply the proof of funds letter you need.

A proof of funds letter can be referred to by many names in addition to the standard meaning of a letter that states you have funds available to complete a transaction. A proof of funds letter is often used in real estate short sale and REO purchases to provide explanation that an investor or buyer has the power to purchase the property they are making an offer on.

Understandably, the currently overworked loss mitigation or short sale negotiators wish to be certain that they are working with a buyer that may perform. They need to know the purchaser has the assets if an agreement can be negotiated on the estate property.

A “leased proof of funds letter” appertains to monies being deposited into a clients private or business account by a backer for a fixed fee. The bank “blocks” the money so that it is not permitted to be withdrawn by the customer ; however the money is in the account to show proof of funds. Extra terms used for this type of exchange are “standby letter of credit” and “blocked funds letter”.

The WSJ said that the U.S. Solicitor’s office claimed “persons who were looking to temporarily lease funds in order to enhance their creditworthiness when applying for loans were instead provided with false proof-of-funds letters on bank stationary showing the funds had been deposited in their accounts.”

Needless to say, it is critical to grasp the difference in the sort of proof of funds letter obtained. If you can access private funds, HELOC loans or funds that can be borrowed from buddies or family, then providing bank records would supply the required “proof of funds letter” paperwork.

If curious about legit “transaction funding” or “acquisition funding” for short sales or REO flips, a normal “proof of funds letter” can be obtained. Look for a lender or financier that is providing transaction funds for the total amount of the acquisition cost without regard for your money or credit situation. Typically a transaction funding fee is between 2-5% of the total of funds used to flip the property at a “double” or “simultaneous” close. This fee is taken from profits at the closing.

If you have an interest in purchasing Real Estate Owned or short sale properties, then you want to understand the fundamentals of transactional funding and proof of funds letters and how they relate to your property interests and activities. Basically, the transactional funding refers to the funds borrowed for a very short period to transfer a property from the present owner, to the transaction coordinator, then to the new owner. Proof of funds letters are used to help secure financing and clear the way for the estate transactions you are involved in.

The use of transactional funding allows the short sale process to happen smoothly. The basic grounds for the loan is that once the first owner is prepared to sell and the buyer is prepared to take over the property (usually with the standard mortgage ), there’s a short term loan wanted to help the transfer period. This suggests the transactional funding is a loan that exists for some hours, then was recovered when the final property owner pays for the property.

Transactional funding works not just for the short sale eventuality listed above.

When buying property, the buyer must provide some kind of evidence that they have the funds to cover the property acquisition – this is where a proof of funds letter becomes helpful. This document that the investor can use to indicate to the parties involved in a real estate exchange that you have pre-qualified to purchase the genuine estate.

This kind of document is particularly useful if you are involved in short sale transactions and REO purchases that are structured with a double closing or when using transactional funding. They can also be used for other transactions that require documented evidence of your financial resources.

Using this letter, the buyer/investor is able to secure any required extra funding or to reassure the vendor that they have the means to fund the estate purchase.

After you know how these financial opportunities can be employed to the best advantage, you will be on track to achieving economic security thru real estate investment.

Morgan Foreman is a recommended author in the field of foreclosures and short sales. He will show you how to obtain guaranteed transaction funding with no cash or credit needed. Do you need a proof of funds letter? Learn about Proof Of Funds and visit www.WeProvideTheFunds.com

If you’re a pre-foreclosure investor, having short sale funds available to finance all of your deals is the perfect investor solution to take advantage of today’s booming foreclosure market.

In the current economic climate there is no income, no cash, and no credit required. You can obtain funding to close all of your deals in 48 hrs!

With the sub-prime mortgage debacle, and the recent tightening of the credit markets, you have no doubt noticed how much more difficult it is to acquire financing for almost any real estate deal these days.

In the past, plenty of hard money options, along with double closings and simultaneous closings made closing REO’s and Short Sales a breeze.

However, with the credit crunch, mortgage fraud, and tighter restrictions with lenders and title companies, closing on Real Estate Acquisitions isn’t as easy as it used to be.

However, there is still one very simple and easy way to close your REO, and Short Sale transactions without using double closings, hard money, income verification, none of your own cash, No AAA credit, No simultaneous closings, or even the over complex land trusts.

That method is using back-to-back closings to get all of your short sale deals closed and funded on time. Back to back closings take a short sale deal and turn it into two separate and distinct transactions.

The first transaction is the homeowner facing foreclosure selling to the pre-foreclosure investor. The second transaction is the real estate investor then selling the property to the end retail buyer.

However, even if you are using a back to back closing, and your end retail buyer has secured their funds, what makes this work is that you need to secure your own funding, as the real estate investor.

So where do you get this funding of your deals? This is often called transactional funding, and today, there are many lenders making these types of loans. Lenders love transactional funding, because they are only lending for a period of a few hours, and this represents zero risk to the private investor’s cash.

With the end buyer’s loan already approved and in place, two separate and distinct transactions take place on the closing day. The first is the investor purchasing the short sale deal from the distressed homeowner.

This is funded by the transactional funding company. Immediately after this transaction has closed, the investor is then turning around and immediately selling the property to the end buyer.

The end buyer is using funds obtained by him through a traditional loan, or cash through lenders like Upperhouse Mortgage. Most conventional lenders today won’t have any issue funding these loans.

The only such exception are FHA loans, which at the time of writing this article, have a 90 day seasoning requirement. However, as the real estate market changes, and the housing market remains volatile, it is very possible that the FHA might change its guidelines.

Transactional funding is the perfect way for pre-foreclosure investors to fund their short sale deals in today’s foreclosure ridden market. There are plenty of choices for funding companies, all willing to fund these simple, easy short sale transactions.

However, one of these companies will even pay you a hefty commission to find deals for them up to $50 Million Dollars. You find it, they buy it, and you get paid a hefty commission. There will never be a better time for you to “Think And Grow Rich” in Real Estate!

WHAT ARE HEDGE FUNDS????

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In the securities world, the term “Hedge Fund” does not necessarily imply any use of “hedging” as commonly understood; for example where commodity traders use options to “hedge” a commodity position. Presently, in the securities world the term “hedge fund” refers to any type of Private Investment Company operating under certain exemptions from registration under the Securities Act of 1933 and the Investment Company Act of 1940. “Hedge Funds” are often referred to as “alternate investment vehicles” and are tailored to the needs of sophisticated, high net worth private investors. A Hedge Fund is generally structured as a limited partnership having a general partner responsible for the investment activities and day-to-day operation of the fund, and limited partners who are the investors supplying capital but not participating in trading or operations of the fund. The limited partners have limited liability. That is, their exposure to loss is limited to their investment. The General Partner has unlimited liability and is liable for the activities of the partnership. The General Partners principals limit their liability through the use of a corporation or limited liability company as the General Partner. (Of course, the principals cannot limit their liability from the application of the anti fraud provisions of the Federal Securities Laws.) All of the investors’ capital is pooled and is utilized by the General Partner or Investment Manager to implement its trading or investment strategy.

?Hedge Funds are “Non-Public Offerings.” The private offering exemption prohibits Hedge Funds from making any public offering. Therefore, Hedge Funds are prohibited from general advertising and generally secure investors through word of mouth, consultants, registered representatives, brokers or investment advisors. Hedge Funds have investors that are either “accredited investors” or “qualified purchasers.” In general, the Federal Securities Laws define the terms “accredited investor” and “qualified purchaser” in terms of minimum asset and income threshold that must be met before they qualify to be investors in the Hedge Fund. Since the Hedge Fund generally limits investment to “accredited investors” or “qualified purchasers” both of whom are required to meet certain minimal asset and/or income thresholds, the Fund Manager or administrator must gather background information on potential investors to determine whether they meet the minimum requirements to be “accredited investors” or “qualified purchasers.” By making a non-public offering to certain kinds of investors, (accredited investors or qualified purchasers) the investment vehicle will be exempt from registration requirements of The Securities Act of 1933 pursuant to the safe harbour provisions of Rule 506 of Regulation D. Where the investment vehicle is limited to no more than 100 investors, and otherwise complies with the safe harbour provisions of Regulation D, such an investment entity is exempt from the extensive regulation pursuant to Section 3(c)1 of The Investment Company Act. Section 3(c)7 of The Investment Company Act offers a similar exemption to private investment companies with “qualified purchasers” as investors.

As an unregulated entity, the Hedge Fund Investment Manager is free to undertake greater risk on more volatile positions thereby exposing investors to potential substantial profit as well as substantial losses.

?Typically, Hedge Funds provide for the payment of an Incentive Allocation or Performance Fee to the hedge Fund Manager/General Partner. Performance Fees range from 20% to 40% depending on the strategy employed by the Hedge Fund Manager. Typically, the Performance Fee provides for a “high water mark” structure which provides that incentive fees are paid only to the extent that the fund continues to meet or exceed the “high water mark.” Additionally, typical Hedge Funds include Management Fee of 1% to 2% of all assets under management.

?Generally there are two kinds of Hedge Funds. On the one hand, there are the huge worldwide funds operated by charismatic managers such as George Soros. On the other hand, there are small boutique-styled Hedge Funds identified with a particular segment or investment strategy. The Fund Manager’s expertise, experience and background in recognizing investment opportunity will dictate that fund’s particular niche. For example, there are the “Biotech Hedge Funds” which are managed by experienced and highly qualified investment managers who may also hold advanced degrees in science and medicine. There are “Tech Hedge Funds” specializing in the technology sector managed by individuals having specialized experience trading in that sector. With the emergence of day trading and the availability of the trading technology, a number of floor traders and brokers are leaving the traditional brokerage and exchange venue to participate in the computer screen trading phenomena.

?The boutique “Hedge Fund” typically relies on the particular skill and expertise of the Investment Manager or Trader. The highly specialized Investment Manager may utilize a “Sector” style of investing focusing on a particular industry or economic sector. Conversely, an Investment Manager utilizing a “Market Neutral” style will maintain a portfolio of securities which are generally ? short and ? long. Some Investment Managers utilize a “Value” investment style based upon assets, cash flow and book value; while other Investment Managers follow the “Emerging Markets” style and invest in emerging and foreign market equity and debt. “Trading” funds utilize an opportunistic investment style taking advantage of market trends, events and opportunities for short term profits. Each Fund Manager develops and uses a particular investment style that is unique to the experience, expertise and personality of its manager.

?Unlike Hedge Funds, Mutual Funds raise money publicly; are highly regulated by the Securities and Exchange Commission, the Internal Revenue Service and other agencies; and offer investment diversification and are restricted from purchasing many types of derivative instruments, leveraging, short selling and other kinds of transactions.

?Unlike the Mutual Fund Managers, the Hedge Fund Manager generally invests in the fund that they manage and participate in profits as well as risks with their investors. Unlike the Mutual Fund fee structure (which is determined on assets under management) the Hedge Fund Manager receives incentive allocations on performance.

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SPOT CURRENCY TRADING “FX” IS THE NEWEST AND FASTEST GROWING INVESTMENT VEHICLE IN THE HEDGE FUND INDUSTRY.?

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????????? Now there is an easy turn key way for successful traders to set up their own Spot Forex Fund where:

• You are the Fund Manager;

• You Earn the Incentive Fee;

• You control the Investment and trading strategy.

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provides to you:

• The Turn Key Start up at a fraction of the traditional start-up costs.

• The? turn key back office that permits you to control the general operations while not having the responsibility for the day to day operations.?

TURN KEY HEDGE FUNDS, INC.

allows the successful trader or broker to become a Hedge Fund manager at a fraction of the traditional start-up costs and further provides continuing back office support. Now, you can launch your own fund!??

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ForEx, hedge funds.?Registering with the Commodity Futures Trading Commission

Generally, the Commodity Futures Trading Commission has jurisdiction over transactions in ForEx futures and options contracts offered to retail customers, and the only counterparties that can lawfully enter into these contracts with retail customers on an off-exchange basis are persons that are: (i) registered with the Commission as a futures commission merchant (FCM); (ii) certain affiliates of a registered FCM;, or (iii) otherwise regulated, e.g., as a securities broker-dealer, a bank, a financial institution or an insurance company.

On May 22, 2008, the Congress passed the Farm Bill which, in Title XIII, contains several amendments to the Commodity Exchange Act involving the retail trading of foreign exchange.

Under the CFTC Reauthorization Act, a person operating pool solely trading spot ForEx is not required to register as a CPO at this time (but may be so required in the future upon promulgation of regulations by the CFTC).?

If?I?start up a Fund of Funds and allocate among equity?and futures funds what? kinds of registration issues do I need to be concerned with??

As a Fund of Funds you must be aware of each particular states Investment Advisor rules. Many states have exemptions from registration. Also if you intend to invest in futures or commodity funds, you should register with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) as a Commodity Pool Operator (CPO). This?CPO’s?associated person?must successfully complete the NASD Series 3 examination.?

Must a finder be registered as a broker-dealer??

Generally, No.?Generally?a finder does not have to be registered as a broker-dealer if its finder’s activities are limited. A “broker” under the Securities Exchange Act of 1934 is “any person engaged in the business of effecting transactions in securities for the account of others.” The SEC staff has found activities such as (a) participating in presentations or negotiations, (b) making any recommendations concerning securities, (c) receiving transaction-based compensation, (d) structuring a transaction or making recommendations regarding the nature of the securities, whether to issue securities or to assess the value of securities sold, and (e) continuing involvement in sales of securities to trigger broker-dealer registration obligations.? However, a number of states, Texas and California for example, ?take the position that only a registered representative (broker) may receive kind of compensation.?

Are there any other types of finders available to issuers in a private placement??

Yes. Rule 3a4-1 provides a non-exclusive safe harbor from the definition of a broker for persons associated with an issuer who are engaged in securities-related activities incident to their duties on behalf of the issuer. See Securities Exchange Act Rel. No. 22172 (June 27, 1985). Employees and possibly individual affiliates of an issuer who are not registered representatives of broker-dealers may be considered “associated persons” for purposes of Rule 3a4-1, in which case they may be exempt from registration and will be permitted to engage in limited sales activities pursuant to the Rule’s safe harbor.?

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What is meant by the 25% limitation on ERISA assets investment in a Hedge Fund?

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The Departments of Labor Regulation defines the use of ERISA assets. ERISA Assets include self-employed persons, and individual retirement accounts in pooled investment vehicles. Section 403 (a) requires that generally all assets of an employee benefit plan shall be held in Trust by one or more Trustees. Section 3(21) defines a fiduciary to include any person who exercises discretionary authority or control over the management of Plan Assets. Section 404 provides that a fiduciary must discharge responsibilities in accordance with fiduciary standards of care as set forth in Section 404 (a) (1); that is, (a) solely in the interest of the participants and beneficiaries of the plan (b) with the care skill prudence and diligence under circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and would like aims; and (c) with respect to an investment of a Plan Asset, by diversifying the investments of the plan so as to minimize the risk of large losses.

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Section 406 also prohibits a fiduciary from causing a plan knowingly or negligently, to engage in prohibited transactions with “parties-in-interest.” A party-in-interest includes the plan sponsor a person providing services to the plan, a person in control of the plan sponsor, a person controlled by any of the forgoing or an employee, affiliate or relative of any of the forgoing. Section 4975 of the Internal Revenue Code imposes excise taxes on “prohibited transaction” the definition of which is similar to the definition of prohibited transactions under 406 of ERISA. Taxes range from 15% of the amount involved each year up to 100% of the amount involved if corrective action is not undertaken within a certain time period. Section 502 (1) of ERISA imposes upon a fiduciary a civil penalty equal to 20% of the amount received from such fiduciary as a result of a settlement agreement or judicial preceding involving a breech of fiduciary duty. Section 406 also prohibits a fiduciary from dealing with plan assets for his own interests or account, acting in any transaction in which his interest are adverse to those of the plan or receiving consideration for his personal account in connection with any transaction involving plan assets. Section 409 imposes personal liability upon a fiduciary who breeches his duties and responsibilities. Section 405 provides that a plan fiduciary may under certain circumstances be liable for a breech of fiduciary responsibility by a co-fiduciary or for improper delegation of investment authority. Section 412 requires that with certain exceptions a plan fiduciary shall be bonded. Section 403 (a) provides that the trustee shall have the exclusive authority and discretion to manage and control the assets of the plan unless the plan provides that the trustee is subject to the discretion of a named fiduciary or the authority is delegated to an investment manager who is either a bank, an insurance company, or registered as an investment advisor under the Investment Advisor Act 1940.

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If the assets of the fund are considered plan assets the trustee may have improperly delegated its investment authority unless the managers and general partners of the fund are either named fiduciaries of the ERISA Plan limited partners or properly appointed as an investment manager within the meaning of Section 3 (38) of ERISA. Moreover, unless the fund manager is a bank or insurance company, it must be registered as an investment advisor under the Investment Advisors Act of 1940 to serve as an ERISA Investment manager. Under the regulations, if a retirement plan purchases an equity interest in an entity, underlying assets will be considered plan assets unless (a) the equity interest is a publicly offered security; (b) the equity interest is a security of a registered investment company; (c) The entity is an operating company; or (d) Benefit plan ownership of equity securities is not significant. The underlying assets are not significant where such assets represent less than 25% of the value of the class of equity security of the entity. Thus, for a hedge fund, a significant benefit plan participation would be an investment of 25% or more by a benefit plan investor in the hedge fund.

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It is to be noted however, that only an equity investment in an entity can cause an underlying assets of that entity to be plan assets. The acquisition of debt instruments will generally not result in plan asset treatment

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ERISA plan

Not under Rule 501(a)(1). Rule 501(a)(1) accredits as ERISA plan that has a fiduciary which is a bank, insurance company or registered investment advisor, or that has total assets in excess of $5 million. The plan, however, may be an accredited investor under a different provision of Rule 501(a).

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