37 Tips on Trust Deed Investing

   The following is some of the safety checklist from the investment book
                                  entitled

                             "BETTER THAN GOLD"

Here are 37 helpful little safety tips proven capable of offering help and
even protection against rip off in some cases. Although I created the list
for myself it might be of some interest to other retirees, seniors, the
elderly, buyers and sellers of real estate, private investors, realtors,
builders, owner builders, land owners, pension planners, or anyone else
involved with a note secured by a deed of trust in "any" real estate
transaction for "any" reason. If I can answer "yes" to "all" of the
following 37 questions before I arrange a particular trust deed investment,
(based on my 25 years of experience) then it will be what I call a "safer
trust deed investment". Feel free to Email your mailing address for a Free
video and brochure that tells all about how we arrange privately funded
financing ALL OVER CALIFORNIA.

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                               THE LOAN ESCROW

1. Is the T.D. being brokered through a reputable and experienced Trust Deed
investment broker willing and able to verify his long and successful track
record while brokering privately funded trust deed investments of this very
kind? Is this loan a legal loan being handled only through a reputable
licensed broker with a long established track record in this particular area
of expertise? It is always much safer to invest in a Trust Deed through a
reputable established professional. You wouldn't consider trying to remove
your own appendix! Word has it that only in some very rare instances can a
select few brokers ever really legally "guarantee" your trust deed
investment "in writing" against loss, legally. Although many brokers may be
more than willing and some even financially able to make various verbal or
written guarantees, be aware that laws may prohibit that activity (without a
certain near impossible to obtain permit). Be aware, the message is loud and
clear! No one can legally assume the responsibility for the risks associated
with your trust deed investments for you. Like riding in a airplane, no
matter what your broker says or agrees to in writing you are the person at
risk.
Why not take the time necessary to verify your brokers track record,
background or experience, and professional standing. Ask if he is complying
with all applicable state and federal real estate law , truth in lending
laws, other regulations, and applicable usury laws, etc. All investments
including even the safest of trust deeds still possess some element of risk
which no broker can protect you from, an unexpected ground slide, an
earthquake, nuclear accident, acts of God, plague, disease, war. Your number
one best protection against many trust deed fraud, scams, and rip offs is
your consistent use of an experienced long established professional, linked
with your own basic understanding of the following safety criteria.

2. As a written condition of funding this loan have you required a full
extended A.L.T.A. lenders policy of title insurance WITH NO DELETIONS? If
you do not, eventually you will lose your money to defects of title,
mechanics liens or other items not covered by standard C.L.T.A. coverage.
Never become involved in any trust deed without always first obtaining the
maximum title insurance coverage. I always require complete, full A.L.T.A.
maximum lenders title coverage with no deletions. NEVER come in contact with
real estate transaction or any trust deed without always requiring the
maximum title insurance coverage available to protect your note and deed of
trust and it's position from unexpected or undisclosed liens or other
defects of title. Inadequate, limited, or no title coverage constitutes one
of the errors or mistakes most commonly resulting in the loss of ones entire
investment! Don't get caught by hidden, overlooked or even future defects of
title. Well meaning brokers, friends, partners and relatives can and do bury
un knowledgeable private lenders by accident when unforeseen surprises,
liens, taxes, and even other loans liens or items of record pop up
unexpectedly and permanently ahead of your promised position. Without the
maximum proper title coverage on every trust deed, every time, you will not
survive long! Always obtain the maximum title insurance coverage available
with no deletions or exceptions insuring each and every note and deed of
trust you fund individually every time you fund, rewrite, extend, alter,
modify or do anything with any note in any way. Always require a complete
maximum A.L.T.A. lenders policy of title insurance coverage with no
deletions on every deal I broker or I won't touch the deal! Also, always
check to see if you might need any special or additional endorsements such
as added mechanics lien protection or a new foundation endorsement or
anything else. Don't ever invest in any trust deed without obtaining the
maximum title insurance available every time and always from a bona fide and
reputable title company. (complete A.L.T.A. lenders title coverage is what a
bank usually requires for themselves and can be very different in what is
and isn't covered when compared to standard C.L.T.A. lenders coverage.)
Title insurance insures you and assures you that your first is indeed a
first and not something else. This rule alone could have saved thousands of
unwary victims the nightmare loss of their irreplaceable nest egg. If 300
victims at one more recent multimillion dollar mortgage company rip off
travesty had only asked!

3. AS A BROKER, I PERSONALLY NEVER HANDLE ANY MONEY AT ANY STAGE OF THE
INVESTMENT PROCESS, THAT WAY I CAN "NEVER" EVEN ACCIDENTALLY BE GUILTY OF
MISHANDLING MONEY. Will your funds check be made payable directly to a
reputable, bona fide and above all "independent" escrow company not owned by
me the broker.

4. Always remember to make all of your instructions to any escrow in
writing? Our computers automatically have the safety check items built into
our instructions for each escrow whenever instruction docs are drawn!

5. Have you taken the time to read and understand all items contained in the
preliminary title report issued by the title co. on this property from cover
to cover? Have you pinpointed any items of record that are not to remain?

6. The smaller your T.D. investments, the higher the degree of
diversification you will have! This can be mighty important to anyone
planning to rely on the monthly payments generated by T.D. for income! Are
you certain that this T.D.'s total required investment will NOT represent
more than 10% of your total overall investment portfolio?

7. Are you confident that you have ultimately committed yourself to the
shortest possible loan term? T.D.'s funded for too long a term could be
difficult, expensive, or even impossible to liquidate, if a need to
liquidate arose later. I usually will not exceed three years on T.D.'s I
broker unless the investor is fully aware that longer notes could be
difficult, expensive, or even impossible to liquidate.

8. As a Safer Trust Deed Investor are you familiar with the simple steps
necessary to have the title co. promptly file notice of default on a
delinquent borrower (the title co. Will cheerfully handle most aspects of
this process for you)? Are you also prepared to file promptly at the time
when any two monthly payments are both late (or when any past due balloon
has also passed the specified grace period)? Are you prepared financially as
well as emotionally for that inevitable "one" out of every 127 borrowers
statically who will file bankruptcy subsequently delaying payments and or
any payoff of that loan for six months or even up to a year or more on
occasion? Can you handle this situation if you know your investment is very
well secured and you have total confidence that you will be paid off in full
eventually with all interest due together with all proper late fees and
penalties because you bothered to follow these 37 rules and among other
things you know that the real estate is worth a lot more than your loan in
case you did have to foreclose and take the property back?

9. Are you certain that no one in this transaction is making any loan
extensions, additional advance, or modification or other changes of any kind
no matter how small to any existing real estate loan without first seeking
the written authorization and legal approval of any/all junior lien holders
of record (even ones that you didn't know existed). It may be safer to let
an experienced T.D. broker oversee the proper handling of all extensions,
modifications, rewrites, subordinations having the title co properly update
all fire and title policies, which will require the title co. to obtain all
junior lien holder legal written approvals, as well as getting all the proper
modification doc's recorded.. and issuing a brand new full A.L.T.A. extended
lenders title policy with no deletions to best protect your investment?

For more information on becoming a safer trust deed investor SEE PROTOCOL
III
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                         ESTABLISHING PROPERTY VALUE

10. Did you and or your representative physically inspect this piece of real
estate? This is a must!

11. Did you take the time to establish your own personal opinion as to the
value of the real estate collateral by using many (up to ten) different
approaches to value? NEVER RELY ON ANY ONE APPRAISAL OR INDICATION OF VALUE
BY ITSELF ALONE. Are you realistically prepared to own this property for the
values you've accepted?

12. Did you remember to use the actual purchase price as the value of the
property whenever that property has changed hands, sold, or was purchased
(all or any part) within the last 18 months? After all wouldn't you agree
there isn't a more accurate indication of that properties value than the
very price it actually sold for (no matter what "they" say or how low that
value may seem). Remember, 18 months (to the day). I will adjust upwards for
verifiable cash or capital improvements to the property since it was
purchased.

13. Are you absolutely certain that you have not accidentally mistaken any
of the "personal" property on the premises for real property in establishing
your own opinion of value? (This can become very tricky or confusing with
respect to items like trade fixtures, a mobile home on piers, or a hot tub,
and many others).

14. Did you ask the borrower how he plans to repay this loan if you don't
feel comfortable securing the loan primarily against real estate equity
alone.

15. Is the loan(s) between $100,000.00 to $1,000,000.00 in Ca. and well
secured by prime single family homes? I don't like to arrange loans under $100K because of the many laws and restrictions that come in to play. Loans above $1mil are too large to offer private investors enough diversification. There are also some recent changes in the laws as to the maximum fees which can be charged. Does your loan comply
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DETERMINING A SAFE AMOUNT TO LEND

16. Does this T.D. investment represent no more than a 60% Loan To Value
ratio on even the most prime of owner occupied homes, and not more than 50%
LTV or less on any homes not owner occupied? (60% LTV means that your loan's
total plus or combined with the total of any other loans or liens ahead of
you together should never exceed 60% of the properties existing realistic
today, or "now" value) as collateral for any money you lend that is to be
released to the borrower today.

17. If this T.D. is to be secured by raw land be sure your loan does not exceed a 35% L.T.V.
(maximum allowable loan to value ratio unless you wish to buy it). (25% to
35% is our current LTV for prime land loans in first position only). Never fund junior loans on raw land under any circumstances.

18. Are you on the lookout for any adverse conditions affecting the property
that aren't of record or that can't be revealed with a physical inspection?

19. Did you only use "existing" improvements to establish the properties
current value and are you sure you are not mistakenly counting ANY promised
or proposed future improvements as collateral today? Arranging loans with
draws based on some future work or improvement can be very tricky to
beginning investors.(that's another book). Never rely on future promised
improvements unless proper draws for the work to be completed have been set
up.

20. Do I want or need any last minute additional documentation prior to
close? (such as but not limited to the following); final permit card signed
off, certificate of occupancy, notice of completion, well report, code
compliance inspection, final recording of lot split, copy of any existing
lease rental agreement, proof of purchase price, any closing statements,
copy of any additional existing appraisals...other inspections. toxic
reports, roof reports,termite inspection that may have already been made.

21. Are you sure that you and or your trusted representatives have not
overlooked or forgotten to include any important clauses? (Acceleration or
due on sale, late charge, timber clause, partial reconveyance, late charge, and many more.)

22. Did you require the purchase and pre payment of 12 months fire insurance
premium paid in full in escrow (as coverage will cancel if check bounces!)
SEE PROTOCOL III
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                       FUNDING JUNIOR LOANS (SECONDS)

23. Whenever funding a junior loan do you have enough cash to cover at least
6 to 12 months payments on loans ahead of your loan to be held in reserves
at all times.

24. When funding junior loans did I remember to file a "Request for notice"
of default, and or consider other notifications.

25. Did I receive verification and or accurate proof of any loan balances
and due dates as well as all other pertinent information on all senior loans
ahead of my junior loan?

26. If I plan to invest in a junior trust deed did I make certain that the
due date of my junior loan FALLS SAFELY FAR ENOUGH AHEAD of the due date of
any senior loan(s) that might be in front or ahead of my loan. Did I require
all loans ahead of any junior loans I broker, that are straight notes, (and
not fully amortized loans) to always be due at least a MINIMUM of a year or
two after my junior loans due date. It's a lot cheaper to cure a senior loan
ahead of me for only back payments than it is to cure that loan ahead of
mine by having to pay the entire principal balance off because an early
balloon payment is now due and payable in full on the senior loan and
foreclosing ahead of you.

27. Make sure that I never accidentally subordinate any of my interests in
any real estate transaction unless I clearly understand specifically what
will be required of me to protect my position if problems do arise. Don't
ever invest in a trust deed secured by a junior loan behind any senior loan
that you yourself can't feasibly afford to assume full financial
responsibility for. (You may be forced to take over full responsibility for
all loans ahead of yours in order to foreclose and protect your investment
or if you don't then face total loss of your investment). Never subordinate
in any real estate transaction unless you clearly understand what
specifically will be required of you to protect your position if problems
arise. Always ask for more cash down, more additional collateral (that also
has to again meet all the 37 safety tip items) or both! Recheck any loan you
subordinate to, also against all 37 points, and never agree unless it
improves your equity position, pays a lot more, and you fully understand and
can handle borrower subsequently skipping town! If I am subordinating any of
my interests do I clearly understand what will be required of me legally and
financially to avoid the loss of my remaining interests should problems
arise?

28. Did I make sure that I haven't made a junior loan behind a senior loan
where the senior loan has any type of provision or ability allowing it to
grow or increase in size in any way.
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                             About The Borrower

29. Did I make sure the borrower is not in a loan cycle. I won't rewrite any
of my loans for any more than the amount of principal forcing the
borrowers to come up with points, closing or more in order to close escrow. I would only increase a loan upon re write if it was well below a conservative L.T.V.

30. Learn how to recognize and avoid equity skimming, cash backs, and even
the blatant "misuse of subordination". Common Trust Deed Fraud Scams and Rip
offs can often times be easy to spot if you know what to look for and where
to look for it. Are you certain that no one in this transaction is
subordinating away TOO MUCH of their real estate equity to another? Are you
certain that the combined total of all real estate loan proceeds (plus any
other financing or money being released to the buyer) in this transaction
does not exceed what you would be willing to pay for that property EXACTLY
AS IT SITS TODAY?? What will your equity position be if no improvements are
ever made to the property? Are you absolutely certain that no one needs to
ask for a little more cash down payment, and or even some additional real
estate equity or additional collateral to adequately secure this particular
T.D.?

31. Am I confident that I am not making too many real estate loans to one
borrower at this time? Without a great deal of experience "one loan" should
probably be your maximum limit of loans to any one borrower. 5 is my current
limit but I broker them with many different investors. Individually you may
want to stick to not exceeding more than 1 loan to a particular borrower.

32. Can I ALWAYS be reached by mail, email, tele, fax at the address of record I've listed on
all my recorded documents? Can I always be reached the quickest at the
address used?! I saw a man get his second wiped out at a sale as he was out
of the state in his motor home for 6 months and never saw the notice filed on a first ahead of his second sitting in his box 'till it was too late!

33. Am I prepared to fill out the 90 day notification of balloon payment (at
close and attach it right to the note and mark the calendar). Will I
remember to send the notice BY "CERTIFICATE OF MAILING" ONLY on all loans as
it is a good habit to develop?

34. If there is to be more than one lender on the note did I ask about power
of attorney only to foreclose if one partner is gone? What about loan
servicing? Who will hold the note? (I believe it is illegal for my broker to
hold my original note for me)

35. I didn't accidentally allow a corporation to act as a borrower alone
without requiring the corporations owners to also sign individually as
personal guarantors on my note or even on a special guarantor form if
necessary. The ability to obtain a deficiency judgement against a $500.00
corporation could be fruitless. A borrowers motivation to walk might be
hindered if HIS own personal name is on there along with the corporation.

36. Tax service, have you decided if you want a service to notify you if
back taxes stack up on the property your loan is against?.

37. Does your nose know the answer to this one by now? How does this loan
sit with inner gut feelings? Am I learn to develop and educate my nose? Did
I ask myself as the final question how this loan prospect smells? If you've
made it this far and past all 36, then the final judgement call is yours! 1.
Only fund loans that are legal and always through your reputable experienced
broker who can verify his flawless, long, and successful track record. SEE
PROTOCOL III

Contact person:

copyright 2002 Brad Evans Real Estate Loans

Email: mail@bradevans.com

tel: 530-272-5916, fax: 530-273-5636
P.O.Box 163, Cedar Ridge, Ca. 95924
Ca. Brokers Lic #00426805/Ca. Dept of Real Estate