3 Reasons To Sell A Home With Owner Financing

As a property management company, we see a large number of homes that are in excellent condition in great neighborhoods that only 5 years ago were the hottest houses on the market. Now, these homes have mortgages that are equal to what the house is worth. The problem is the house will not sell because of the cost to sell the home requires the homeowner to bring money to closing. This is why an Owner Financed home solves both the seller’s as well as the buyer’s problem. Below are 3 reasons to sell your home with Owner Financing.

Reason number one is the ability to sell the home without bringing money to closing. If the home is worth $150,000 and the loan balance is $152,000, selling the traditional way would require the seller to bring between $15,000-$18,000 to closing. Add up the Realtor commissions, closing cost, seller concessions, time on the market, and the ability to close becomes very difficult. Many of the homeowners I speak with choose to avoid selling with an agent to hopefully save the Realtor commissions. Statistically speaking, the chances of selling a home FSBO are far below the averages of selling with an agent. When you sell with Owner Financing you avoid the high commissions, closing cost, many concessions, and time on the market. Why? If a seller can offer financing, then a buyer doesn’t have to incur the expense of a traditional sale along with the strict bank qualifying we are seeing today. By offering Owner Financing, you can sell the home for what it is worth and many times what is owed. This is very attractive to buyers.

Reason number two would have to be time. Days on the market in our surrounding area varies from 6-12 months. This varies from price range to area. Our average is under 8 weeks. Why? We have more buyers than houses. The mortgage industry has made buying a home extremely difficult. Or, at least like it was prior to 2000. If the buyer is self-employed, then the chances are somewhere between slim and none. In fact, I can’t get financed and I’ve been been buying, selling, and managing properties for more than 9 years with good credit.

Last, but not least is number three. Options. If you have to sell and owe more than the house is worth or close to it, what are the options? There are 10 ways to deal with real estate. You can sell for cash, sell with buyers getting financing, sell it with Owner Financing, Trade, Swap, Lease with an Option, Rent, Short Sale, Deed in Lieu, or Foreclosure.

The more choices you have the better you can prepare. Selling with Owner Financing is another option and is gaining momentum. My guess is we will see a huge shift by the end of the year. Why wait? Contact a local property manager. A property management company typically have a large number of clients currently renting that want to own.

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Profiting With Owner Financed Homes (AKA Seller Financed Or Owner Carry) – Real Estate Agent Gold

For the real estate agent, broker, or professional, who understands how to structure owner financed deals, gold in the form of commission checks is awaiting. After having spoken with dozens of agents regarding the topic, I want to help provide solutions to your number one question: How do I get paid?

Agents upon hearing the words “would the owner be willing to finance the sale” usually have a negative alarm going off in their heads that says “I won’t get paid”, or “I won’t receive my full commission”. By understanding how to structure these types of deals, you can assure yourself commissions in any market.

Obviously, we all know that it’s important for the buyer of the property, on a home listed with agents or brokers, to do one thing; find a way to cover three important things: 1) the agents commissions, 2) the seller’s closing costs, and 3) the buyer’s closing costs. We all know agents need to eat, therefore they need to get paid for helping buyers and sellers close real estate transactions.

Assuming we are working with a home owned free and clear (don’t worry, according to U.S. Census Bureau statistics, 31.7% of owner occupied owned homes are free and clear of mortgages), the key for the buyer is to find a way to provide approximately a 10% down payment (at least) so that all three of those above mentioned objectives can be obtained.

The first, and easiest, method is to have the buyer pay 10% cash down from either their bank account, a line of credit, or borrower from a relative. This will allow the seller to finance the remaining 90% of the purchase to allow the transaction to close.

The second, not as easy, method is to have the buyer borrow the 10% down payment from any lender on this planet to bring the cash to the closing table, and then allow the seller to hold a 2nd lien position of 90% to allow the sale to close. Even strict banks will worth with MANY borrowers to give the bank a 10% Loan to Value loan on a residential property. How can the bank lose ? If they borrowers make their payments, they win. If the borrowers default, they win. They are more secure in this type of deal than any other investment they could park their depositors hard earned money.

In summary, the agents who find a way to help buyers come up with 10% to cover their minimum acquisition costs can become a deal structuring machine. They can help sellers sale their homes quickly, and help buyers when conventional lenders are running for the hills.

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The Impact of Structured Finance on the Ghanaian Financial Services Industry in the Next 10 Years

A Company can issue bonds to investors secured on the future profits expected to arise from part of its existing life business.

When a pool of financial assets (such as car finance, home or commercial mortgages, corporate loans,royalties, leases, non-performing receivables, and contractually pledged operating revenues) are structured and transferred to a ‘special purpose vehicle or entity’(SPV or SPE) it is known as a Securitisation transaction.

Generally, most securitisation transactions involve a two tier transaction in which the originator of the assets to be securitised transfers such assets to a wholly-owned SPV.In turn the SPV transfers or pledges such assets to another entity, which issues rated securities in the capital markets that are collaterised by such assets. This second tier entity can be another SPV or a multi-seller commercial paper conduit and can provide funding by issuing medium term notes or commercial paper.

Types of Securitisation transaction

Usually with securitisation transactions, the transfer of rights to assets can take one of two main forms, true sale or synthetic securitisation.

1. True Sale securitisation

In a true Sale securitisation, the originator (for instance a bank selling mortgages) sells the assets to the Issuer. the assets are serviced by the servicer who happens to be the Originator, with respect to say the mortgages sold to the Issuer(i.e.) and the originator continues to collect the principal and interest from the borrowers on behalf of the issuer on such mortgages and see to all default mortgages as well.

The significance of true sale is that the first-tier sale of the assets from the originator to the SPV is structured as a “true sale” such that the assets are removed from the originator’s bankruptcy or insolvency estate and cannot be recaptured by any trustee. Thus, the issuers are usually incorporated as insolvency remote entities; and may not engage into any transactions other than those necessary to effect the securitisation what is known as “limited purpose-concept” by which virtue the SPV will not be allowed to issue any additional debt or enter into mergers or similar transaction.

The transactions can be conducted as conduit, whereby the purchaser purchases and securitises assets from a number of different originators. This is done by through refinancing by issuing commercial paper into the capital market. Banks usually engage in conduits by arranging securitisation for their clients, or standalone where the purchaser only purchases assets and issues as asset-backed securities in the context of a single securitisation transaction. No commercial paper is issued.

It must be said here that, the legal characteristics and economic substance of the transfer will be the primary determining factors as whether the transaction is a true sale not a loan.

2. Synthetic Securitisation

In a synthetic securitisation transaction the originator does not sell any assets to the Issuer and therefore does not obtain any funding or liquidity under the transaction. The originator enters into a credit swap with the issuer in respect of an asset or pool of assets, transferring the originator’s risk to the issuers. Under this contract, the issuer pays the originator an amount equal to any credit losses suffered in respect of such assets or pool of assets. The Issuer’s (SPV) income streams in a synthetic transactions are the fixed amounts paid by the Originator under the credit default swap and interest amounts received on the collateral. These transactions are typically undertaken to transfer credit risk and to reduce regulatory capital requirements.

3. “Whole-Business” Securitisation

Apart from the main two forms above,” whole business” securitisation is sometimes used to finance a stake in private or management buy out of the Originator.

This type of securitisation originated in the United Kingdom. It involves the provision of a secured loan from an SPV to the relevant Originator. The SPV issues bonds into the capital markets and lends the proceeds to the Originator. The Originator services its obligations under the loan through the profits generated by its business. The Originator grants security over most of its assets in favour of the investors. In terms of cash flow, there are three most common types of securitisation transactions:

Collaterised Debt- this is similar to traditional asset-based borrowing. The debt instrument need not match the cash flow configure ration of any of the assets pledged.

Pass-Through-this is the simplest way to securitise assets with a regular cash flow, by selling participation in the pool of assets i.e. an ownership interest in the underlying assets so that principal and interest in the underlying assets collected are given to the security holders;

Pay-Through debt instrument-this is borrowing instrument and not participation. Investors in a pay-through bond are not direct owners of the underlying assets but simply investors.

One significant thing with SPV is that unlike with ordinary operating companies, whose charters typically provide for maximum flexibility, the charters of SPVs provide for the entity to have only those powers that are necessary to accomplish the purpose of the securitisation transaction. Thus the SPV in a securitisation will have the power only to purchase the particular receivables contemplated by the transaction, issue the related capital market securities, and make the payments on them and so on.

The reason for these restrictions is thought to keep the risks of the SPV’s own bankruptcy as narrow as possible: the smaller the range of the entity’s activities, the smaller the risk of a bankruptcy.

Securitisation is based on the underlying assets being securitised. Rating agencies spend a lot of time to estimate the credit risk for all underlying assets in Securitisation transaction. Other risks considered is the prepayment risk.-the risk that a portion of the assets in the underlying pool may be repaid early. Payments and settlements in Ghana are considered to be good. Prepayments can reduce the weighted average life of the pool and as a result expose investors to considerable uncertainty over future cash flows.This can be mitigated by separating the payment of the principal and interest or the conversion of fixed rate returns to floating rate.

Third Party Risk

Collateral is not the only important factor in structured finance transaction. A servicer risk would be particularly strong in Ghana. This is the case that the collection of payments, distribution to investors and performance tracking will fail. Because in Ghana credit rating is not popular.

In a Securitisation or structured finance transaction, a lot of third parties are involved who must fulfill their various responsibilities to make the transaction go on successfully .”Time is money”, it is said. Other third party risks include trustee managing succession of servicing in case of servicer default, notifying investors and rating agencies of breaches and defaults, and holding cash payments to prevent servicer misuse of cash flows; manager responsible to balance the competing interest within a transaction.

Financial Risks (Interest Rate Risks, Foreign Exchange Rate Risks, Devaluation Risk)

Financial risks usually cover interest rates, foreign exchange rate & availability, currency and inflation risks. Inflation really affects the originator in a Securitisation transaction for reasons like raising the cost of the transaction which can delay its completion. Some governments are also sceptical about foreign investment in their country and sometimes prevent the repatriation of funds by foreigners outside. Devaluation and interest rate just like inflation can also affect Securitisation negatively especially when provision has not been made in the transaction deal for that. Russia is a good example. International funds are often cheaper than local ones, but given the fact that the payment to receivables is sold locally, and paid in local currency, using foreign loans creates exposure to the risk of currency depreciation.

Political Risk

Because cross-border transactions are conducted such that assets generate cash flows in the domestic currency while the securities backed by those assets are denominated in foreign currency, there is the risk that regardless of the credit strength of the underlying assets, the issuer might default on the payment. The following relevant known political risks are identified:

Expropriation risk:
The act of taking something from its owner for public use. This involves the act where a government takes over assets or accounts of local parties in the event of financial crisis.

Nationalisation:
Transfer of business from private to state ownership. This is not usually experienced in the West as in South America and Africa. In relation to Ghana’s political situation, this is not envisaged.

Convertibility risk:
This is the risk that in a national crisis, the government might impose a moratorium on all foreign currency debts because of a financial crisis in the country.

Change of law:
The ruling government can change the laws overnight and this can affect a structured finance. Sometimes for economic and political reasons, tax laws are enacted which might not be to the advantage of the originator in terms of the cost increase to certain elements which could increase the purchase price of the product on completion and can jeopardise the securitisation transaction which must be made cheaper if it is to succeed. For example an increase in the fuel tax can affect the entire transaction because tax neutrality is paramount to securitisation transaction.

Legal & Documentation Risks
Following change of law in political risk discussed above, possible legal risks to a Securitisation transaction include inadequate legal, legislative, and regulatory framework on tax, financial and money market & securities. Sometimes the case and administrative laws in the country concerned are not developed. These issues are of great concern to investors and for that matter the originator will have to deal with this risk.

In asset-backed securities(ABS),however, the legal and documentation risks include uncertainty surrounding the transfer of assets from the seller/originator to the SPV (i.e. ‘true sale’) the need to ensure that holders of ABS receive full control over the underlying assets; the bankruptcy remoteness of the issuing SPV.

This means reviewing all the covenants in relation to the separation of the SPV from the seller; the legal roles of the trustee and servicer across all relevant jurisdiction including Ghana to curtail operational and execution risks associated with the payment and receipts of transactions.

Because of the changes in deal structures and considering the legal and financial framework of Ghana, legal and documentation risk will be very high.

Regulatory Risk
The risk that originators and other lenders will not be treated fairly. There should be a laid down regulation on profit-sharing, regulations on the rated instruments and most importantly what structure should the SPV that issues the securities be.

Liability Structure Risk
This risk is the issues associated in which with the tranching or slicing of securities brings conflicting interests which if not checked may disrupt the appropriate distribution of receivables to end-investors. The key to structured finance transaction is the payment waterfall which set the covenants for paying the interests and principal and allocation of losses among investors. This can be sorted with over-collateralisaton tests which ensure the existence of sufficient collateral in the underlying pool of assets to cover principal payments; and interest coverage test to ensure that there are sufficient interest proceeds to cover interest payments to note holders.

Levels of Risks
Rating agencies usually would have to assess the totality of the risks envisaged in each transaction before assigning a rating to the security. Thus the potential for any shortfalls in receivables and the adequacy of any credit enhancement to ensure that the end-investors are assigned the right level of default risk. Cross-border transactions for example require specific analysis regarding the potential limit that could apply to the rating of the notes because of the potential default of a government and the possible application of a moratorium by a government in times of crisis.

Benefits of Securitisation
The use of Securitisation is not limited to one specific asset or income flow. The application stretches beyond the existing bank-funding products and equity funding arrangements. The challenge is the approach with which a Securitisation is considered and the ability to measure the impact thereof on the future of the business. This stems from the fact that Securitisation is cash flow driven and not earnings-improvement driven.

Generally, securitisation can offer the following benefits and we would later analyse to see whether or not it would benefit Ghana.

Efficient access to capital markets: when transactions are for example structured with credit ratings by a recognised credit rating agency on most debts, pricing is not tied to the credit rating of the originator. This is very significant if the originator is not credit worthy.

Limitation on issuer-specific’s ability to raise capital is reduced: securitisations can minimise an entity’s inability to raise capital because capital raised under securitisation becomes a function of the terms, credit quality or rating, prepayment assumptions and prevailing market conditions.

Illiquid assets are converted to cash: Securitisation makes it easier to combine assets which otherwise could not be sold on their own, to create a diversified collateral pool against which debt can be issued.

Raise capital to generate additional assets: capital can quickly be raised such as releasing long-term capital for any allowable purposes like completing capital project and purchasing additional assets.

Match assets and liabilities to minimise risks: a well-structured securitisation transaction could create near perfect matching of term and cash flow locking in an interest rate spread between that earned on the assets and that paid on the debt. This means that Ghanaian business entities can raise enough funds without necessarily providing collateral for security because of the transfer of risk.

Raise capital without prospectus-type disclosure: A conduit securitisation transaction allows one to raise capital without disclosure of sensitive information of any sort; in fact information is kept confidential.

Complete mergers and acquisitions, & divestitures more efficiently: Assets can be combined or divested efficiently under Securitisation transaction. By dividing assets into smaller parts against which debt is issued it can become possible to do away with other business entities which are no longer profitable.

Transfer risk to third parties: Financial risk on loans and other contractual obligations by customers can be partially transferred to investors under securitisations.

More funding beyond bank lending: A structured Securitisation transaction enables the originator to raise funding while maintaining the right to the profit on the receivables. However, these funds will not be linked to its credit rating but rather the credit rating is on the special purpose entity created for the Securitisation transaction. By incorporating an offshore SPE, many businesses in Ghana with poor credit rating might potentially raise funds for any purpose.

The overall effect of securitisation of bank loans and credit aggregates is likely to be a reduction in the level of credit extension by the monetary sector and a reduction of similar magnitude in the M3 money supply. This is to say that the banking sector closes its balance sheet by setting off some loans against some M3 deposits.However,the original borrowers still have obligations but to the SPV not a bank and institutional investors still own assets which are now tradable securities not M3 deposits.

Structure of Ghana’s Financial System
The financial system comprises of
1. Bank of Ghana
I. Savings and loans bank
II. Discount houses
III. Finance houses
IV. Leasing companies
V. Forex Bureaux
2. Securities and Exchange Commission
I. Stock Exchange
II. Brokerage firms
III. Investment Management companies
IV. Trustees and Custodians
3. National Insurance Commission
I. insurance Companies
II. insurance Brokers
III. reinsurance Companies

The banking system in Ghana is structured to serve the needs of all citizens as much as possible. At the end of 2005,the banking industry was made up of Merchant banks, Universal banks, Commercial banks, development Banks,ARB Apex banks, and Rural Banks; with a total growth of its assets by 17.62%.

The Non-Banking Financial institutions (NBFI) sector is made up of Savings and Loans Companies, Discount Houses, Finance Companies and Leasing Companies. Total assets for the Non-Banking Financial Institutions also grew by 47.98% which were mainly triggered by loans and advances, investments, other assets and fixed assets. The Discount houses hold 82.61% of the overall total investments of the NBFI sector.

The new Banking Law, Act 673, which became operational in 2005 with its higher Capital Adequacy Ratio requirements, new sanctions regime, as well as higher governance standards ensured that banks remained generally compliant with regulatory and prudential requirements.

The Securities Market in Ghana

African stock exchanges face a number of challenges before they could enter a new phase of rapid growth. The most critical issue is to eliminate existing impediments to institutional developments. These include a wider dissemination of information in these markets, the implementation of robust electronic trading systems and the adoption of central depository systems. Ghana has since established a central depository system in November, 2004.

The Ghana securities market is regulated by the SEC. The Ghana Stock Exchange is underdeveloped with reference to exchanges in US, Europe and even South Africa. South Africa for example has market capitalisation of $180 billion, one of the largest in the world with Ghana’s market capitalisation of $11 billion.

Considering that Ghana has had just one Securitisation transaction -structured finance-with no records for research, and the position of Ghana’s macro-economic situation, it was found expedient to look at the Securitisation transaction in South Africa. Even though Securitisation transaction is still at an early stage of development in South Africa, it has grown rapidly in recent years and it would be a suitable “benchmark” after which to carve Ghana’s Securitisation transaction.

According to the available information, the first Securitisation in South Africa was aimed at mortgage Securitisation; developments were very slow over the 11 years. Then in 1992 Securitisation was applied to corporate equipment rentals and leases up until 1997 through 2000s with Securitisation on trade receivables, properties, future rebate flows, future cross-border flows and CLOs.

South Africa’s motive for Securitisation transaction was to benefit from more efficient financing and profit maximisation; improved balance sheet structure and finance ratios; improved risk management; and lower economic and regulatory capital requirements among others.

Although the Securitisation transaction is still in its infancy in south Africa, available records show that issuance involving domestic banks in South Africa (i.e. private banks) has increased from R250 million in 1989 to a whopping R26 billion by the end of October 2005. Based on a recent study conducted on the UK market which suggests that Securitisation provides investors the opportunity to attain a higher after tax return in comparison with after tax returns being generated by equity related property investment , Securitisation in South Africa is being applied as an acquisition tool in acquiring properties and as a portfolio optimisation and value unleashing tool.

Securitisation regulations in South Africa compares to international Regulatory Practices similar to those in the United States of America and regulate the manner with which Securitisation assets and income flows are transferred from the originator to the SPV and operational aspects and efficiencies of the SPV.

Different opinions exist in the South African market regarding conformity to Securitisation regulation. One centres on the use of specific words “Bank or deposit-taking Institution” that only South African banks can originate a securitisation.The other opinion is on non-conformity as appropriate if a company or business other than a bank originates a Securitisation.

The onus of the matter is that Securitisation transaction is also designated within the regulation as an activity which is not limited to the business of a bank under certain conditions; thus allowing companies other than a bank to embark on Securitisation transaction.

The Ghana Securities Exchange Commission’s annual report for 2004 does not mince words about the position of the Ghana Securities market. It reported that “despite the modest decline in index performance in percentage terms, the GSE still maintained its position as one of the best performing stock exchanges in the world in 2004 for the second time running.” Market capitalisation of listed Companies on the Ghana Stock Exchange increased by 84.90 trillion cedis to 97.61 trillion cedis from just 12.6 trillion cedis.In dollar terms, market capitalisation went up by 654.0% from US$1.43 billion at the beginning of 2004 to US$10.8 billion at the end of 2004.

Unlike the stock market, the bond market in 2004 was relatively low posing “a serious market development challenge to the commission”. The turnover value of listed corporate bonds in 2004 declined from US$606,600 in 2003 to US$73,414 a decline of 87% whilst government bonds also declined by 71%.The value of listed corporate bonds in 2004 was US$6.79 million compared to US8.98 million in 2003.

The corporate bond market remained relatively quiet. However, the US dollar denominated corporate bonds traded on the market increased by $41,783 to $115,200.

The government of Ghana is determined to use municipal, corporate, government and agency bonds to improve activity in the primary market. As a result of that, the Bank increased accountability and transparency in line with International Financial reporting Standards (IFRS) best practices in its financial reporting and disclosures in 2005.
Coupled with this, other relevant Government policies were strengthened to reinvigorate revenue collections and consolidate public expenditure aimed at reducing the domestic debt in relation to GDP .As a result of that the government started a programme of reducing domestic debt in relation to GDP to enable the private sector access credit and lead the growth process.

The significance of Bank of Ghana in the financial system is that the bank is the provider of technical support for the legal and regulatory reform of the financial system to minimise risks and ensure legal certainty especially for electronic transactions; and also monitor various financial laws at different stages of development.

There is no doubt that people learn from experiences of others so do nations about the successes and failures of other nations especially with regard to something new and complex like the concept of Securitisation transaction. It is recommended that Securitisation in Ghana is modeled on the experience of South Africa’s Securitisation transactions with some changes in the legislations to fit the situation in Ghana.

Ghana’s private sector is beset with many constraints for no doubt, however, the other side is that, there are so many opportunities either untapped or unidentified comparative as well as other natural and mineral resources already in large quantities. There is potential for more effective exploitation of these endowments. But continued reliance on a few commodities with low prices and wages subject to fierce international competition in slow global markets have left the country vulnerable to hardship. These products could be structured and securitised.

Training of players of Securitisation transactions like, the originator, servicer, legal advisers, accounting adviser, tax advisers and others must be continuous about the technicalities of Securitisation transaction from now till the take-off. There should not be any mediocrity as is the characteristics of government and government agencies.
Investors and potential originators must also be educated on the benefits of Securitisation as an alternative for traditional capital formation besides equity and debt which is common to the Ghanaian business community. Providing better understanding of, cash flow drivers behind Securitisation transactions, credit rating agencies and also credit enhancement issues. This would trigger a strong desire for this form of capital formation to put Ghanaian businesses in the race to compete favourably on the international scene.

The technicalities of grasping the intrinsic techniques of properly analysing the segregation of assets and income flows from the company that owns them to the SPV which is meant to control the assets for the benefit of investors, must be well understood by the investment community.

A lack of genuine understanding of the drivers behind a Securitisation transaction, the ability to measure the impact on future operations as well as the initial costs involved in Securitisation creates difficulty in clearly defining the true incentives for conducting Securitisation amongst South African companies. Thus a comprehensive understanding of such amongst Ghanaian companies will boost Securitisation transaction.

One issue that needs to be tackled very well is the Tax Laws to make the Securitisation transaction work. Ghana operates a free-zone scheme and this can be extended to encourage Securitisation transaction. Certain areas within the country could be assigned as ‘free zone for Securitisation’and ‘use as tax haven’ to nurture and groom Securitisation in Ghana.

The regulatory environment through which Securitisation is conducted, coupled with capital market infrastructure to support adequate pricing of all risks associated with all forms of Securitisation transaction-conduit, synthetic or “whole-business”.

Finally, it is recommended that, research into the legal framework on bankruptcy, tax, and commercial laws relating to structured finance and Securitisation in particular should be encouraged among the Ghanaian academia.

Ghana indeed has an enabling environment suitable for Securitisation transaction. Key issues to drive this on might include as mentioned above extension of existing laws like Tax, Bankruptcy and commercial Laws to include treatment of Securitisation transaction.

Ghanaians are strong-willed, forceful and patient. When the expertise is acquired for Securitisation with the training of the players above, good governance of the other key government policies like MIDR and Strategy for 2004-2008‎, improvement on the Ghana School Financing activity‎ they will serve as catalyst for Securitisation.

Considering the experience of South Africa over the past decade, the experience of the developed economies in Securitisation transaction and the macroeconomic and the investment climate continue to improve as it is now ,in the next 10 years, Ghana will not be too farther away from engaging in Securitisation transaction if not already there.

Reference:
1. ‘Securitisation in South Africa-a revolution for local funding’, by Bagley et al(2003) Fitch Ratings available online accessed 20/07/2007
2. ‘Securitisation: A public tool?’ Treasury working paper, by Davis,N ,available online treasury.govt.nz/workingpapers/ accessed on 20/07/2007
3. ‘Securitization.’Wikipedia, the free encyclopaedia. Reference.com accessed 25 Feb. 2007.
4. “Consider Securitisation to improve liquidity in the South African property market” by Eugene G van den Berg, accessed on vinodkothari.com accessed on 04/08/07
5. “Note on the impact of securitisation transaction on credit extension by banks” in Quarterly Bulletin December 2005 by N. Gumata and J .Mokoena
6. “The awakening of securitisation in south Africa”, by Van Vuuren online available vinodkothari.com/secafric.htm
7. Africa -Ghana organising in the informal sector(on line) Available from oecd.org/dataoecd/html (accessed 29th April 2006)

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Paying For Personal Finance Advice

During your first consultation, a potential adviser should give you clear information about what services you’re being offered and give you an indication of what you will have to pay for it. This will enable you to compare the cost of financial advice and shop around for the adviser who is best value for money.

Your adviser will explain the above by giving you two keyfacts documents concerning:

Services: This document explains the type of advice you are being
offered and the range of products offered.

Costs: This list explains the different ways you can pay for the advice you receive. It also gives an indication of the fees or commission you may have to pay. If you pay by commission, it shows you how this compares to the average market commission

The new advice regime (introduced in December 2004) makes it easier to understand what you have to pay. You must be given a menu of charges from the adviser when you first seek advice. This will enable you to compare the cost of advice and to shop around for a better service.

There are three main ways of paying for advice, explained in the following sections.

Forking out a fee

Fees are either charged by the hour or as a set price for the whole job. This is known as fees-only advice and is the most expensive option, with fees costing anything from £75 to £250 an hour (depending on your location and how experienced your adviser is). You may get the first half-hour free; the initial meeting is often an introductory session where you simply get to know one another better and figure out whether you are happy to work with the adviser.

You have to pay a fee even if you don’t end up taking out a financial product. This isn’t the case if you pay by commission.

If you do pay an hourly fee, make sure you get a rough idea of how many hours’ work is required and how much the total cost is likely to be. Ask your adviser for an estimate of how much he might charge you. You can also request that he doesn’t exceed a given amount without checking with you first.

If you use an IFA, you can choose to pay a fee rather than commission. Only an IFA has to offer the choice of payment options. Tied and multi-tied agents don’t have to offer a choice, although they may decide to anyhow.

Going with commission

If you aren’t prepared to pay a fee, or can’t afford to, some advisers charge commission instead – and all IFAs must offer this option. The commission is deducted by the personal finance product provider when you invest money in a product. As well as an initial commission for setting up a plan, you may also be charged an annual commission on top, which is known as trail commission. Check with your adviser whether this applies before signing up.

Combining fees and commission

You don’t have to choose fees or commission – you can have a combination of both. Some product providers pay your adviser commission when you buy a product, which he may pass onto you in one of a number of ways. These include passing on the full value of that commission to you by reducing his fee; reducing the product charges; increasing your investment amount; or refunding the commission to you.

Look for negotiation

Imagine this: A widow deposits £100,000 into her savings account after selling her home and moving somewhere smaller. The bank or building society sees this deposit and offers her a chance to improve her income. Half an hour later, she has been sold whatever the bank is pushing that month for those in her situation. The adviser may have earned as much as 7 per cent in commission. That’s £7,000 for 30 minutes of easy work. Great money! And no investment risks!

Tied agents and those working for big firms rarely negotiate even if you ask. If you’re happy handing out so much of your money for so little work, fine, as long as you’re aware of what you’re doing.

The alternative is to avoid the non-negotiators and either ask for a commission-sharing scheme or pay for services by time, at a pre-agreed hourly rate, and get a 100 per cent rebate of all commissions.

Expect to pay a minimum £75-£100 per hour, so always ask for an estimate of how long the job will take.

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What Is A Commission Advance, Exactly?

I know, I know. The name is pretty self-explanatory. You get your commission before you would otherwise get your commission. Nothing tricky about that at all. This is just a simple agent commission financing tool. But how does it work? Why is this a mutually beneficial transaction? What are the risks, costs, and issues associated with receiving (and providing) a commission advance? Read on for answers to all of these questions, and more!

As an overview, here are some main takeaways:

• Up to 75% of your commission can be funded

• There are no credit checks

• There is no out of pocket charge or deposit

The first step in the process is, unsurprisingly, getting a property under contract. If you’ve already done that, you’re ahead of the game. Congrats! Once you’ve done this, you’ll fill out a quick application to cover the basics. This should take you no more than 30 seconds to do. If you’d like to speed up the application process, you can pre-upload required documents, such as the purchase agreement, the MLS listing, etc to submit along with your contact info.

From there, both your transactional history as an agent or broker and the specifics of the transaction on which you are requesting a commission advance will be reviewed. Once accepted and approved by your broker (or by you, if you are your own broker), this entire advance amount is funded within 24 hours. Simple as that. No lengthy employment history to summarize, no credit checks, and no massive stack of loan documents to sign.

When escrow closes, the advance is paid back (plus the advance fee) through the closing, so you don’t ever need to come out of pocket. If your escrow falls through, you can simply switch your advance to another escrow for a minimal fee (no hefty penalties or immediate payback requirements).

There are a number of reasons why this would be beneficial to real estate agents. With recent regulatory reform impacting and delaying transactions due to TRID disclosures, a commission advance can help agents stay on budget with marketing, prospecting and the administrative expenses of running a business. Commission advances can also be used to solicit additional business in the geographic proximity of the existing escrow to brand the agent as a top producer in the area.

Is this strategy unconventional? Sure. Do you really need the money? Probably not. But everyone could use some extra money at some point, and it is nice to know that commission advances are available when needed.

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What Is The Cost Of A Physician Disability Insurance Cover?

Owing to the fact that the resources and assets at people’s disposal are shrinking day in day out, human beings have learned to be careful when it comes to spending. They will always remember to ask the question of what the cost of something will be. There are high chances that some people are interested in taking physician disability insurance and are wondering how much it will cost them. If you are one of them then keep reading to learn more.

Sincerely speaking it might not be possible for and individual to quote the exact cost of taking such a cover. Any person who comes up with such a figure might be wrong. They will be wrong because the conditions surrounding a single person might not be the same conditions surrounding another person. To determine therefore the amount of money an individual will be expected to part with will depend on some aspects which include the following:

Age of the insured

Once a person makes up their mind to go for Physician Own Specialty Disability Insurance then they should stay informed that their age will determine the amount of money they will have to pay as premiums. In most cases the amount of premiums increases as the age advances. This means that the younger a person is the cheaper their policy will cost.

This should be a motivating factor to the young people. They should try as much as possible to go for these covers because if they wait longer the price of the policy will go high. Taking this advantage can be a wise decision in one’s life.

The gender of a person

In most cases people forget thinking about gender of the person taking the cover. In general, the females have high chances of facing the risks insured against. This will imply that the higher the chances of getting impairments the more amount of premiums an individual should expect to pay.

Those people who are of a masculine gender will purchase the cover at a relatively lower price compared to their counterparts of the other gender.

Health history of a person

The health history of an individual can tell us more of what we should be expecting. Those people who have been having several ailments or those whose family tree is known for certain defects should be prepared to part with large sums of money. These health complications have high chances of making an individual suffer from a risk insured against.

An individual with a clean history in health issues should therefore be prepared to pay less amount of money in terms of premiums.

The type of policy

The insurance companies offer a wide range of policies. This means that when making a choice an individual should make sure that comparisons have been made. For instance an individual who gets attracted to the Guardian policy should be ready to pay a lot of money because this is the most expensive policy. So when taking Own Specialty Physician Disability Insurance the type and nature of policy taken is greatly vital to a person.

There is no way all these aspects can affect an individual negatively and therefore there is need of getting worried of things like one is a female, they are of an advanced age, or they have bad reputation in their health history all shall be well.

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Why Should One Go For Professional Disability Insurance?

How does it feel when a person is employed, is working and all is going well? They might be tempted to think that they will remain in such states for a very long time. The most important thing an individual should begin by appreciating is that the events of the next day, next hour or even next minute are uncertain. This is why a person should make sure that they have taken necessary precautions so that they can continue enjoy living on this earth.

It takes a few minutes to contract an impairment. To make the matters worse, there are some impairments which might make one unable to continue working. For instance, think about a news reporter who gets involved in an accident and ends up losing all their legs. Probably they will no longer be able to attend events and report as they used to do before the occurrence took place. This stretches to other several professions and therefore taking precautionary measures is what an individual should plan for. Some of the reasons as to why taking Own Occupation Disability Insurance policies remains benevolent to an individual include the following:

Ensures financial security

Every human being who is employed today has dependents. They also depend on what they earn for their daily upkeep. It might not be easy for such a person to survive and continue supporting the people they were supporting after an impairment given that they will no longer be employed. An individual who had taken a Professional Disability Insurance is assured of a happy living because they will be compensated.

There are some companies which pay up to 75 percent of what an individual used to earn. Even though an individual will be receiving less than what they used to earn, the most important thing here is that they have something to survive on. It can be frustrating for an individual who has no money, no employment and cannot work but has bills to settle.

Allows one time to transit to another profession

There are various types of professions across the world. Once an individual becomes disabled such that they cannot continue performing their work well, they should think about changing their profession. For instance in the case of a reporter, they can become an editor.

In most cases some training will be necessary to allow these people take up new roles. The compensation they receive will help them to go for such training activities. An individual who has nothing might not be able to change their profession because they lack moral and financial support.

Grants one mental solace

Think about someone who is bedridden because of an accident. This person has no food, no money and they have exhausted their savings. Such a person will have to survive at the mercy of friends, relatives and other well-wishers. At some point they might be taken as a luggage to those taking care of them.

When a person mentally surveys all these conditions and realize that it was not their mistake, they might contract mental frustration. The only way such a person will be healed is by getting an assurance that they have support. There is no need of waiting for an assurance that might never come. One has to go for Professional Own Specialty Disability Insurance and all shall be well with them.

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Get The Best Americas Doctor Disability Insurance

It is very important for doctors in America to have disability insurance. Unlike many other professions they work in an area of high risk. No doubt they are well trained educated and are working 40 hours a week, most of the time on their feet.

They need insurance to take care of any eventuality in their life wherethey fall ill and have to take rest. It is become extremely difficult for physicians to get disability cover in their own specialty. There is work being done at Doctor’s Disability Shop so that doctors can avail of a discount to get disability insurance for their ‘own specialty’

How Does Own Specialty Insurance Work?

Doctors are given the opportunity to choose their ‘own specialty’ disability insurance plan that is ideal for them. Once the doctor has decided on the plan, it is easy to apply since it is done electronically and does not require any paper work.

Disability Pro protects your income so you can provide for your family when you are faced with a disability. All that the physician needs to do is get the right amount of coverage. Disability Pro helps you to meet your financial needs when you are disabled and cannot take care of your patients. You can get remuneration which is equivalent to your own specialty.

Physician disability insurance covers the physician in his own specialty. The insurance stays with the physician even though he changes his employer. He can get up to $15,000 in monthly benefits. If it is catastrophic disability the doctor can get nursing at home and health care. All physicians get 15% reduction while AMA members get 35% reduction.

Physician’s Disability Insurance Policies

There are different types of disability insurance policies that physicians can avail of. They are Mass Mutual, MetLife, Berkshire Life (Guardian), Principal, and Union Central Life. Many of the provisions are same in each of the companies. But there are a few differences which may help to choose the particular insurance company.

It is very important to classify the medical specialty to determine the premium rate. The higher the occupational classification assigned to the medical profession the lower is the premium rate. Different companies may assign a different class of occupation to the profession which might change the rate of premium. The financial planners or the agents are in a better position to advise the best insurance company to insure as per the medical specialty.

The Best Physician Disability Insurance

Like all professions doctors also take precautions to see that health and life insurance are taken care of in their life and try to invest wisely for a good retired life. But many times they do not take into account a disability or injury.

The chances of a disability and injury are quite high and at such times it is difficult for social security, worker’s compensation, insurance and savings to meet all the bills. Disability insurance is a necessity. You have to know what the coverage that the disability insurance provides and the policy that is not taxable. The agents are the best people to guide you in taking the right policy.

So, if you are a physician who wants to take disability insurance contact the agents to find out the best policy for you.

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Why Do You Md Own Specialty Disability Insurance

When it comes to insurance types that are usually very much ignored, disability insurance tops the list. This is due to the fact that you hardly see people paying for disability insurance as they are more concerned about auto insurance and the more popular type of insurances. Generally, you might not know about habits you indulge in or the fact that your health is deteriorating regularly until you are suddenly down. Furthermore, there are also a number of sudden disasters that could suddenly make an individual disable in an instant, especially accidents. This is apart from the unpredictable nature of the body as illness or disease that could lead to disability can attack an individual in an instant.

Md own specialty disability insurance is a type of insurance policy that covers a good percentage of your monthly income from your job in the instant that you are suddenly unable to do any time of work. Overall, you will be protected in terms of your finances, should you become unable to work. Most people find it difficult thinking about disability as nobody wishes to be disable. This notwithstanding, there are several people who due to one disability or the other cannot work. With a disability insurance, you will be protected from having to face serious financial hardships if you suddenly become disable. Here are some reasons why you should have a Md own specialty disability insurance.

Income Loss

A major reason why you will need Md own specialty disability insurance is as a result of income loss. If you are losing your source of income due to disability, you will be getting some paid sick leave. However, the expenses on diagnosing what is wrong with you, treating it and recovering from the disability could be huge. Furthermore, your monthly expenses such as feeding and toiletries amongst others will continue. Even though your medical bills are to be covered by a medical insurance, you can still become stranded due to the other expenses. Furthermore, when your source of income is completely cut off due to disability and you have bills to continue to run, own specialty disability insurance can go a long way to help you cater for your bills.

Medical expenses

Even with your medical insurance, the increasingly expensive cost of healthcare can be a major challenge. You will need to continuously pay bills and buy drugs all through the period you need treatment and recovering. There are cases where a therapists or other specialist might be required to speed up your recovery. All of these require a lot of money. The transportation to and fro the hospital for check-ups will also require spending more money.

Other expenses

Miscellaneous expenses will also come up while you are suffering from your disability and unable to do any paid job. Having enough money to still sometimes make yourself happy such as going for dinner and even attending birthdays and other celebrations with friends, will go a long way to save you from a stressful and boring life, during your period of disability.

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Disability And Disability Insurance For Doctors

Disability has been described as a condition in which the sufferer is unable to perform optimally the normal day to day functions which they used to be involved in. For doctors disability is a condition in which they are unable to attend to their patients any longer. They cannot carry out surgeries or go to clinic and all the other numerous activities which they are usually involved in.

During the course of work and over a period of time, it is possible for a doctor to develop some kind of disability or the other which can seriously impair the functions of the doctor. Doctor Disability Benefitsdescribes the way which insurance can be used to ensure that doctors do not suffer unduly in the case of any eventuality and they get disabled and unable to work.

Some of these disabilities include

1. Cardiovascular diseases and diseases of the circulatory system- this might be due to the fact that long hours are spent standing up and working. It has been noticed that a lot of doctors suffer from heart diseases and circulatory system health challenges. When these sicknesses impair and affect the normal day to day function of the doctor then his ability to function and attend to his clients is impaired.

2. Musculoskeletal illnesses- the long hours of standing and not sitting down can also affect the bones and joints of doctors. This can lead to illnesses such as rheumatism, arthritis and the likes. One problem with these illnesses is the amount of pain which sufferers go through over the course of the illness. This suffering makes it most of the times impossible for doctors to attend to patients and perform surgeries.

3. Mental disorders- doctors are also human like the people they treat and so they are also prone to suffering from whatever illness which humans suffer from. One of such problems is psychiatric illness. Some doctors while on the job have been seen and reported to have exhibited erratic behaviour. When this wrong behaviour was brought under scrutiny, they found out that the doctors were actually suffering from one mental illness or another ranging from plain depression to schizophrenia and even manic depressive disorders. All these illnesses will certainly affect the doctor’s ability to function optimally and properly. In such an instance such a doctor might be asked to stop working.

All the illnesses mentioned above and much more can deter a doctor from being able to continue to function well in the capacity which is expected of him. When a doctor suffers from any of such disabilities, it will be a thing of sadness if such a doctor does not have an insurance plan. A disability insurance plan is a kind of insurance plan. If a doctor takes out a policy which has disability insurance as the thrust of its focus, such a doctor is better placed to ride out the waves of life which such disability has thrown at him.

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