Editorial / dragged from another site
From: The Wife
Author: MatthewC (Host) (---.clmbus1.ga.home.com)
Date: 07-26-01 20:46
This well-written letter has been made available to everyone who is interested in reading it and fully authorized by John Burley.
I recommend that everyone read it and think for themselves.
Letter to the Editor
Burley & Associates 20165 N. 67th Avenue Glendale, AZ 85308 USA
50 Hasler Park
OSBOURNE PARK WA 6017
Fax: 08 – 9482 3830
Thursday, 26 July 2001
I read with interest your editorial “Wrap lenders prey on the poor” in Saturday’s West Australian and I take a few moments of your time to clarify some of the issues raised in the article.
My name was mentioned in an article in your newspaper on Friday on the same subject. I was pleased that a journalist from your newspaper did try to contact me however I was on a short holiday break and unavailable. When we did call back we were told that the journalist was no longer interested in talking to me. That’s unfortunate, as I would like to have had the opportunity to outline a few important points.
The wrap around real estate concept is one of my primary businesses in the USA. I have invested in many properties using this concept, that is legal in both the USA and Australia. One of the interesting things to note is that ‘wrapping’ is not foreign to Australia. In fact, there is a favourable Australian taxation case dating back to 1927 that proves that the ‘concept’ has been around for a long time here in Australia. I have not invented it, nor have I introduced it to Australia. I have however introduced the concept to a number of Australians over recent years.
The NSW and Victorian governments, while they cannot endorse a concept, have however reviewed and approved this form of real estate purchase for the purposes of qualifying for the First Home Owners Grant (FHOG). This clearly shows that the concept is legal and valid in Australia.
This concept is shown to those who attend my seminars and I always stress at these events that one must investigate the legalities in their own country (and state for that matter) before embarking on a real estate transaction that may or may not eventuate in a “wrap”.
The article questions how the buyer is protected. This is done by the buyer taking possession of the property and placing a caveat over the title, which protects the interests of the buyer under the purchase contract. The price is fixed in the contract, and the buyer enjoys all future profit in their homes. and assures them of all profit on their future on sale. In Australia, both the vendor and purchaser of real estate usually seek independent legal advice and this independent legal advice is encouraged, especially for purchasers, when entering into a “wrap” transaction.
While I was in Perth two weeks ago, we requested a meeting with the Department of Consumer Protection Agency (formerly known as the Ministry of Fair Trading). My solicitor and I met with a Mr Rod Tilley from the Agency and a colleague of Mr Tilley’s. They made it quite clear that while the Department of Consumer Protection stated that they were not in a position to endorse any type of plan, they could in no way find or claim that there was anything wrong with the program you have called a ‘wrap’. During the meeting we also discussed their concern regarding the necessity for a vendor to have a credit providers licence. Once again this is an issue I cover in detail in my seminars. All participants are made aware that they should meet with their legal advisor and review all statutory requirements before they undertake a “wrap”.
Aside from clarifying the above issues, my primary concern with your editorial is the emphasis on ‘preying on the poor; a tactic that I find abhorrent. What I do is give people ‘a fair go’. We work with regular people who want to own a house in regular neighbourhoods (not the cheap property and poor people as insinuated in the article). For many they would never be in a position to own their own home. In the USA many of the hundreds of families who have bought property from me are now on selling their homes, making a significant profit and being able to qualify for a new home loan because they then have a “trade record” of home loan repayments.
Unfortunately, as in America, over one third of Australians do not own their own home. They are honest, decent hardworking middle-class people who have tried to do their best. But circumstances in life (slow credit, the inability to come up with a deposit and/or self-employment issues) make them unable to get a traditional loan. This concept allows those who desire the opportunity to own their own home, to do so. It does so because of the low deposit requirements and term payments.
Sadly, in Australia the finance industry has turned their backs on this large segment of the community and shut them out of home ownership. By providing instalment finance we allow them this opportunity.
Surely giving someone the ability to buy a home is more beneficial than sending them pre-approved credit cards with 16% + interest rates (which happens regularly to the middle-class and traps them in a debt spiral). The subject of morality is by nature a debatable issue. However, I could think of few things better than offering someone who would otherwise be destined to rent for life, the opportunity to purchase their own home. If the two parties (who are in full compliance with the law have sought independent advice) can enter into an arrangement which is good for both then what can be immoral?
Personally I am for helping others and giving them the opportunity to fulfil the Australian dream….which is to own their own home.