First IRA Mortgage, Inc.

First IRA is a wholesale, commercial lending company, exclusively focused on non-recourse IRA mortgages.  We provide mortgage money to self-directed IRA trusts and retirement plans that need financing to buy investment real estate.   We do not provide loans for residential or owner-occupied properties.

The loans that we invest in are non-recourse loans made to IRAs and 401ks, that are owned by individual investors. We do not speak with the IRA account holder. That is the mortgage broker's responsibility.

Legal Professionals are an integral part of a successful, self-directed, IRA real estate transaction.

Important Information for Legal Professionals

Homestead
- The homestead exemption offers virtually absolute protection from forced sale to meet the demands of creditors, except under three special circumstances:
- Counties or municipalities to collect past due property taxes;
- Parties to whom the property was specifically pledged as credit for a mortgage;
- Mechanic who are owed money for work performed in repairing or improving the property.
- Because homestead exemptions are state law, it can also be over-ridden by the United States federal government, to satisfy federal income tax debts for example, although this has rarely occurred

Qualified Domestic Relation Order (QDRO)

Any assignments of pension interests must comply with Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (the Code). Under ERISA/the Code, pension interests may be assigned only if the judgment, decree, or order creating or recognizing a spouse's, former spouse's, child's, or other dependent's interest in an individual's pension benefits constitutes a "qualified domestic relations order" or "QDRO."

To be recognized as a QDRO, an order must be a "domestic relations order." A domestic relations order is:
- a judgment, decree, or order (including the approval of a property settlement)
- that is made pursuant to state domestic relations law (including community property law) and
- that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.

What does this mean? No reconveyance, or assignments.

Evaluate Investment for Potential Expenses
Expenses
- Commissions
- Property Taxes
- Maintenance
- HOA Fees
- Insurance
- Mortgage Payments
All expenses associated with the IRA investment MUST be:

- Paid by the IRA
OR
- Paid pro rata by the IRA based on ownership percentage

Default
When the borrower fails to perform an obligation secured by the mortgage.

This happens when the borrower:
- Fails to pay monthly principal and interest installments.
- Fails to insure the property
- Fails to pay property taxes
- Physical damage destruction to the property (Impounds/escrow accounts has reduced the frequency with which this type of default occurs. )

Remedies:
- Acceleration Clause
- Due on Sale
- Automatic Stay
- Foreclosed on
- “Lift” the Stay

The borrower is an IRA or an LLC.

In Case of Default
- Foreclose on property
- Remedies
- Sell (20% + Equity)
- Refinance
- Rental/Lease
- Annual Contribution
- Transfer/Rollover funds from another retirement account
- Liquidate other assets held in retirement account
- Distribute property

Foreclosure
When a lender or secured creditor sells or repossesses a parcel of real property after a borrower fails to comply with an agreement called a "mortgage” or "deed of trust".

Bankruptcy
- The account holders who have filed for BK have traditionally been entitled to certain immediate protections from creditors and others -- including most debt collection and lawsuit actions.
- Under the new bankruptcy law (Oct 05), some of these protections have been eliminated
- If a non recourse mortgage is being foreclosed on, the automatic stay temporarily stops the proceedings, but the creditor will often be able to proceed with the foreclosure sooner or later.

Supreme Court Opinion: Rousey v. Jacoway
- In April 2005, the Supreme Court ruled unanimously that the Rousey’s IRA account would receive creditor protection in a bankruptcy proceeding.
- This level of creditor protection is not the same as ERISA protection
- Decisions to complete IRA rollovers from ERISA-protected retirement plans must still be made carefully, depending on a client’s particular facts and circumstances.