CW 1012 - Better Financing Sans Dodd Frank, Fair Housing, Avoiding Identity Theft

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome listeners from around the world. This is your host, Jason hartman with episode 1012. 1012. Boy with four digits. These numbers are getting a little bit harder to say and comprehend, but I'm glad we've got so many episodes behind us. Hey, today I want to talk about two very, very important things to investors, but also just to people in general. And the two things I want to talk about today, main focus of our show will be on identity theft, how not to be a victim of identity theft because it's very, very important and there are many types of identity theft. So that we will talk about, but also we'll talk about Dodd. You know, I've discussed that a lot and how that's changing under the Trump administration. And Dodd Frank, of course, is this ridiculous 2200ish, give or take. Gotta pass the bill to see what's in it. Legislation that has been stifling the economy and the real estate market. I know you probably don't think the economy and the real estate market is stifled, but hey, the question is always compared to what? Right, Compared to what? So let's dive into that today. I've got Carrie here with me. Kerry, how are you?

Hey, doing great, Jason. It's good to be back with you.

Well, it's good to have you. So before we dive into some Dodd Frank discussion and how that affects real estate financing and the economy in general, let's talk a little bit about identity theft. Do you know what happened to me recently? And this is the fifth known occurrence for me, and I'm sure there are many unknown occurrences of identity theft. But just a few weeks ago, I got a call from one of my credit card companies saying, did you char $720 at Ashley Home Furnishings? And I said, absolutely not. I did not do that. That is not me. And they Said, well, we got to cancel your credit card and send you a new one. Now, I have had several bouts with identity theft that I'm aware of. But the thing that really concerns me is what I'm not aware of. And people should understand that there are many forms of identity theft. Most people think, well, someone is going to open a bank account in your name or a credit car in your name, or do something financial in your name. But wait, there's more. As the saying goes, right? What they do is they can steal or exchange or impose their criminal history or someone else's criminal history onto you. They can steal your health insurance or health care identity. There are many forms of identity theft. It's not just credit cards, bank accounts, financial stuff. Carrie, this interesting article I just showed you, I mean, can you believe it? This New Mexico woman spends 49 days in jail because her identity was confused. They totally ignored her pleas saying, it wasn't me.

Well, I think that's one that law enforcement tends to hear quite a bit. I didn't do it. It's not me. So they don't believe anybod anyone who says it. But finally, her fingerprints showed they had the wrong woman. Why couldn't they have run her prints before they threw her in the cell instead of 49 days later?

Unbelievable. It's really scary stuff. So, you know, you used to teach seminars when you were a lawyer. Now you are a recovering attorney.

Yeah, trying to be.

And you used to teach seminars on identity databases and how lawyers can use these databases. You know, it's all the world of big data that we're in nowadays. Big data gets confused, doesn't it?

Oh, yeah. You know, there's always problems with it. The data, you know, at some point, the data is input manually. Not so much now because there's so much data. But when it was input originally, there was room for error transpositions of Social Security numbers. There was once a federal judge in New York, and he had the same name as some deadbeat, and their credit reports were merged, so he wound up getting his accounts frozen. And he. He had, like, a nervous breakdown over it. I mean, I had to deal with this guy. And I said, look, I'm sorry, but, you know, the credit bureau merged your report with this other guy. They lived, like, two blocks apart. They had pretty common names and, you know, the judge. I said, judge, what do you want me to do here? Sorry about it. I'll make a donation to your favorite charity to try to make amends here. But there is nothing intended to go after you.

Let's talk. I mean, look at what can people do about this stuff to protect themselves? I mean, let me just give you a few sort of basic tips. First of all, you must have a good cross cut paper shredder and you must shred everything. I'm talking about the envelopes with the addresses. The names of the financial institutions are many times on the envelopes. So if you don't shred the actual envelope itself, it goes into your trash can and the person looking through your trash knows you have an, an account at bank of America or the criminals at Wells Fargo. And Wells Fargo is the most criminal bank in America right now, the most criminal big bank. They are absolutely disgusting. It's like a scandal a week. But lest I get off on a.

Tangent, just a big mistake, a misunderstanding, Jason.

Yeah, right, right, yeah. How they ripped off all those people on those auto loans and those mortgages with the multiple account scandals. If you bank at Wells Fargo, you're probably running a big risk of financial problems because they are scum, absolute scum.

Be nice, be nice.

Come on.

They're just banksters.

I've been known to have an opinion. They're just banksters.

So, yeah, like another thing is you want to ideally lock down your credit report and if you subscribe to each bureau's monitoring service, you can lock them right from your PC or your phone.

Yeah, that's a good idea. So when you lock your credit report, what exactly does that mean? That means if you go to apply for new credit or to rent a house or do anything, they can't see your credit report. Right. You have to unlock it just for that one person to look in and see.

Yeah, exactly. You have to unlock it, otherwise they can't pull it. Now, it used to be it wouldn't come up with Social Security number, whatever, but now the way it is, they just can't pull it. But there's three bureaus and the only way to lock them is to subscribe to each bureau's monitoring service. Or what you have to do is send them letters. But the thing is, the monitoring services, now when you want to unlock it, you just go to your app and you flick a switch and you're unlocked with the sending letters. It could take them weeks to do this, so it's not practical. Honestly, if you lock down two out of three of the bureaus, that'll be okay for most things because they often run two credit bureaus to establish your credit rating. But it's really problematical. There's no service you can go to, to just instantly lock down all three reports. And that is the ultimate protection, at least against that type of identity theft.

And we've all heard these companies, you know, Lifelock and all the rest out there, advertising and so forth, I don't know that I have any big opinion on those. But you know, you do need to do something. And the first thing is you need to keep your records confidential. Use the paper shredder, good passwords on your accounts. You know, it blows my mind even nowadays that people just have their computers open and they'll just let other people use their computers and stuff. And, you know, a lot of you have a tech guy and so forth like that, and I have to let other people touch my computers, but I don't like it okay when I do. So you just gotta keep an eye on things there as well. Your phones, your phone is probably the biggest danger of them all. I have done my good for the day several times now. This tends to happen on airplanes and at airports where I'll have a nice little old lady sit next to me and I will notice that she doesn't have her phone locked down. And I will tell her she must do that and I will help her do it. So being a good Samaritan, you got to do this. Remember, here's the way it works. A lot of you have two factor authentication on various accounts, right? Meaning that when you log in on a website, it will send you a text, text message and you have to put that code on the website. And that's a good thing. You should enable that. But remember, if someone gets a hold of your phone, they now have that text message each time and they've got the two factor authentication right there. So it can be very dangerous. Complicated passwords using different passwords for each website, using a password manager, a reputable one. Be careful of those because that's a whole nother area of problems. But what else am I not thinking of right now?

You ideally should encrypt your hard drive. It comes built into the operating system, but it's not set as a default. So you have to go into your settings and actually encrypt it, which on the Mac.

Okay, so here's the problem with encrypting it and you're going to love this. If you encrypt your hard drive, then if you have a crash and need the backup, you can't get it from the nsa.

Yeah, well, hey, we're still waiting for Hillary's emails right now.

What I'm saying there, folks is that the NSA has a hard drive, a backup of everybody's hard drive. Right?

They got everything. Don't worry about it.

It's really, really scary. But look, folks, I know you've probably heard this stuff before. Most of you don't need this advice because you're probably really swift and shrewd. But I'll just tell you. I was at a dinner the other night in Palm beach, which is a super high end area. I was with a bunch of rich older people at this dinner and I sat down next to this woman and she was in the news media business for many years. She was an anchor woman. Her husband had passed away and she just had two big rip offs happen to her that she was describing to me. One is, and you know, forgive me if I get this wrong, but I think it was ubs. She was suing UBS because they were allegedly preying on wealthy widows. Right. And I could have the name wrong.

Imagine that. Imagine that. Who would think?

Yeah, financial planners and stock market people. Right. You know, Wall street is the organized crime.

Jason, I'm shocked.

So anyway, that was one scam. She lost a lot of money. I didn't really have the nerve to ask her how much it was, but I could tell it was a lot. I'm sure it was many millions of dollars. This was a well heeled crowd I was with at dinner. And then she also fell for. You know, how. I don't know if there's this is going around anymore, but these telemarketers used to call me and they used to say hi, this is so and so from Microsoft and we're getting error messages from your computer. She actually fell for that. Where they would log into her computer with a trojan and get the passwords. And you know, people do fall for that. I mean I got those calls a few times and I yelled at the guy and said he was a criminal and he hung up. But, but you know, because Microsoft does not call you folks. Okay? They don't do that. So yeah, it's unbelievable. Any other identity theft issues? Let's move on to real estate financing. Dodd Frank stuff.

That's really it. So you have to keep all your devices locked down and encrypt wherever possible. And that should take get rid of about 80% of the risk. What we talked about.

Yeah. One little note I also want to say is some of you are doing self management, which I applaud. I think self management can be a very valuable thing. This will be our transition into Dodd Frank. But it can also be Dangerous, right? You got to know some. Just really simple stuff, folks. I was talking to an owner of a property as I'm house hunting. I was talking to a property owner the other day. And he starts describing the property and the neighborhood. He described what color people were and how the neighborhood was changing. I told him, I said, you cannot do that. Do not make remarks like that. You are going to get yourself into trouble and you have to be colorblind. So just know about the fair housing laws. They're really simple to follow. It's not difficult. But some things you might not know about fair housing is. Remember things like familiar status, like they have. You might notice this from years ago, how it's changed when you read real estate descriptions. If they're done right. Nowadays they don't use the word even family room anymore. Yeah, that's considered it's a great room. And yeah, it's a great room. Well, what if it's not great? That's a lie. It's false advertising. It's a not so great room. But the word family room, believe it or not, in our politically correct, insane society, right, is actually a discriminatory term. Because, hey, look, I'm single. I don't have a family. I'd like to have a family and get married. If you know anyone out there, keep me in mind because I am looking. Even though some, like you, Carrie, have tried to talk me out of it. You were talking me out of it.

Yeah, well, the triumph of hope over experience.

Say that again.

That's a good saying. The triumph that Dr. Johnson used to call second marriages. The triumph of hope over experience.

There you go. But hey, depending on your family status, could that be a discriminatory term? And that's just an example. So some of these things go a little farther than the obvious. So just suffice it to say fair housing law is real simple. Just understand them. It's not hard to follow these things and be a good landlord, property manager. And don't make remarks like that to your property manager, even if you're not self managing. Because that's also basically instructing your agent to discriminate. So don't do that either. Okay, let's move on to Dodd Frank. So Dodd Frank, it's this ridiculous piece of legislation. It's huge. Very few people really understand it. I certainly don't pretend to, but I, you know, I'm on the sidelines and an observer like all the rest of us. It came out of the financial crisis. Chris Dodd and Barney Frank, two idiots that don't know anything about, you know, the real world of banking and business. It is changing under the Trump administration. And I talked about this a long time ago. Kerry, what's the latest on Dodd Frank? You've written a couple articles on it.

Yeah. Well, what this thing does is it raises the definition in dollar terms of a too big to fail bank from $50 billion in assets to $250 billion in assets. And that will effectively take a lot of regulations off the smaller community banks. And.

And it allows them to offer qualified mortgages. Like Dodd Frank created this concept of the qualified mortgage, which we don't have to go into, but they can now be more flexible when they're writing mortgages. Like the 43% debt to income ratio on the qualified mortgage looks like it's gone now, as far as I can tell. I've heard of banks going up to 50% recently.

So is this the sign of the lenders getting to a liberal again? And does it hold a sign of maybe a future mortgage crisis?

You know, I don't think so, because the main cause of the mortgage crisis, I mean, there were a lot of causes, but, you know, they didn't bring back liar loans. And the worst one was the stated income loan by an employee. So you worked for a, as a janitor for a school system, and you made $25,000 a year, but you could state, without any fear of repercussions, that you made 250 and then you could qualify for anything.

It's just a zero.

What's the difference? What's a zero among friends?

Yeah, it's 1 0, 25,000 to 250,000. Okay, so look, we were talking a few minutes ago before we started recording on some of this stuff, and you were talking about the Consumer Financial Protection Bureau, otherwise known as the cfpb, and how this was set up by the Democrats as their own little fiefdom. And I found your commentary to be pretty interesting on that, Kerry.

So we need to go back in history a little bit.

Liz Warren, not very far.

Elizabeth Warren, Lizzie Warren, Focahontas.

Yeah, the fake American Indian, right?

Yeah, that's her. But she does have high cheekbones. She somehow became a guru on consumer finance. Never had to take out a loan or anything in her life. She worked for government. She worked for Harvard in a cushy job that she got because she said she was an Indian, even though she says it never happened. So be that as it may, she comes up with this whole Dodd Frank and her pet project was the cfpb, of which she wanted to be the head of it. And to the Republicans she was completely toxic and an outcast. But you know, the Democrats were running the government and they pushed this thing through. So Dodd Frank creates the cfpb and it basically, it has jurisdiction over things that many, many other agencies have jurisdiction over, like the ftc, like the, the Fed, like the treasury, like all, you name it, all the powers they have are already held by other agencies, but they become this super protector of consumerism. And by the way, if you're a Republican, don't bother applying for a job there. And they have no accountability to the Congress because they're funded by a levy on the Fed. So their funding all comes from the Federal Reserve. So Congress doesn't allocate their money and they get ahead this guy, Richard Cordray, because the Republican said, we will not confirm Elizabeth Warren. And then she went on to become Senator, maybe they would have been better off putting her in there. But that's history. So the head of the agency is appointed for a 10 year term and he can only be removed for cause. And there was plenty of cause to remove this Richard Cordray. Like things like hiring only Democrats, seems to me to be cause. But he lied to Congress, he withheld information. He was really evil, this guy.

But the tables have turned a little bit, haven't they?

It's beautiful what's happened. I mean, this is like getting your comeuppance. So pretty much the head of the CFPB didn't have to answer any questions of Congress. It's a totally independent agency.

But then the political tide changed.

Yeah. So what happens is Trump gets elected, Cordray finally resigns because he was probably going to get fired anyway. And the President appoints Mick Mulvaney, who's his budget director. He was already approved by Congress, so under the Vacancy act, he could appoint an already approved official of his cabinet to any agency that required congressional approval for their head. So Mulvaney, he goes there first. There. Cordray appointed his lead hack assistant as the head of the agency. And they said, wait a second, you can't do that. You can't just pick your heir apparent. The President controls this process. So they went to court, they lost. So Mulvaney comes there and then he just recently went to Congress and he said, hey, you know, you guys set up this agency, I don't have to answer any of your questions.

Yeah. And this is in response to Elizabeth Warren's long letter with all these questions, right?

Yeah, she had a 10 page letter with 100 questions and he Said, I don't have to answer any of your questions because the way the person who wrote this law set it up, I'm not accountable to you. If you don't like it, go change the law. And of course, Lizzie Warren was the one who set this whole thing up and it became a slush fund to Democrats. They spend more money on PR and advertising than any other agency in the government, if you can believe that. And they built this magnificent headquarters around the Capitol, someplace that's so over the top it's embarrassing.

Well, it's other people's money, so what's the difference, Right?

Yeah. And they've been interfering in the financial system. Like if you gotten a mortgage in the past few years, you might notice that it takes longer and there's a million more disclosures. So you have 20 more pages of stuff that you're not going to read.

What's interesting about this, though, for investors listening, this is good and bad, right? In a way, because you all complain. I hear the complaints about how difficult the financing process is and what a hassle it is and how ridiculous it is. They ask for all this paperwork, all this stuff. It's absurd, right? Which is true. And you're absolutely right, it is ridiculous. But there's the flip side of that, is that it's ridiculous for everybody else. And those who won't make the effort don't end up buying properties. And so it's a barrier to entry. It's just like the big disgusting firms on Wall street, right? You know, they love all this additional regulation, although they may publicly say they hate it because it creates a barrier to entry and the of regulatory compliance and the headache of regulatory compliance for the little guy that would be a new entrant into the business, into their arena. You know, becoming a big investment bank, for example, like Goldman Sachs, they just don't exist. There's no competition. There's almost no startup culture on Wall street, as I always say, because the regulatory burdens are too high. This is the exact thing that's happening in a microcosm with real estate financing for small investors. Regulatory burdens, big hassle. Most people won't tolerate it. If you listening will tolerate it. It's an opportunity for you. So just keep that in mind. Understand that these things have two sides to them. But I don't like it or agree with it philosophically. But hey, I'm going to take advantage of it if I can.

Absolutely. And that's what you're supposed to do. One final note on Mick Mulvaney he fired the agency's 25 member advisory board last Wednesday and said he would launch a new panel in the fall. As and every hack consumer advocate was on this board. And they're basically communists and out there to sabotage the American financial system, make it even worse than it already is. And they were doing a pretty good job of it till Trump got elected.

Yeah, absolutely. And so now you've got the same unaccountable agency in the hands of the.

Trump appointees who's dedicated to really tearing it down. Mulvaney, when he was in Congress, was a big proponent of never passing it and he warned about the unaccountability aspects of it. They ignored him. Here we are now. And anyway, I guess that's it, Jason. So hope you guys got something out of this and a little further insight into what you need to do to make it in the new economy.

Yeah, absolutely. So identity theft, Dodd Frank, fair housing, some good basic info today on that stuff. And I just want to remind all of you and Carrie for your listeners too, don't plan a tropical vacation, folks, because you should go with us. First week in November, we are going to do an awesome Tropical paradise conference. Our first time doing a conference in a tropical paradise and we are going to immediately after that have the Venture alliance retreat there as well. Venture alliance is my high end mastermind group. So we're going to have a conference, it's going to be a two day conference on real estate investing and economics and then we will do the Venture alliance event near the tropical paradise in a different tropical paradise right after that. So stay tuned for that. Feel free to go check out propertiesasonhartman.com Lots of other resources there. And Kerry, this was a good talk today. Thank you.

Hey, thank you, Jason. Hey, go over to financialsurvivalnetwork.com any questions, comments and hey, send us an email if you feel like it. Klarylutz.com Jason, we'll talk to you again real soon.

Happy investing everybody.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much Appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.