# DRI purchase retail - need urgent advice



## wesflyfisher

I'm hoping can get some advice on whether to rescind my recent purchase of 30,000 points in DRI Hawaii Collection. This was bought during my recent vacation to KBC about 13 days ago. My situation (I  thought) was somewhat unique from most in that I had an offer on the table to purchase addnl points at about $3.00 per share, due to an existing promissory note from 2008 when I first (perhaps foolishly) bought 30,000 points retail. I thought the purchase might be a value proposition and even investment opportunity since I was quoted that the cost of DRI shares was to go from $9.70 to over $14.

I now have Platinum status for what advantage that might be. My family consists of just my wife and my pre-teen daughter, and we are fortunate to be able to vacation up to 2-3 weeks a yr. I've not been successful in utilizing my excess points in the past, and some yrs have had points expire, but hope to be better and more organized in finding ways to utilize them in the future.

My principle concern is an "exit strategy" and whether or not I'll ever be able to recoup what I've put into this investment. When I inquired to DRI about how I might sell my points in 10-15 yrs and at what price, I was told the points would most likely be sold to those interested but unable to get into the Hawaii Collection since the retail availability would be non-existent by then. When I look at resale sites however, they are literally littered w/ offers to jettison shares at sometimes less than $1 per point. What the resale market will be like in 10-15 yrs compared to the price I paid is the question?

Also, critically, should it be prudent, how much more time do I have to rescind?

Thanks very much for any prompt advice!


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## DeniseM

Unfortunately, you are already past your time to rescind, which is 7 days in Hawaii:  http://tug2.net/timeshare_advice/cancel_timeshare_purchase.html


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## wesflyfisher

Yikes, I think that's crushing. Still any opinions from others on exit strategy? Was this just a horrible mistake?


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## DeniseM

Your only hope is trying to get the resort to take it back, and forfeiting your down payment in lieu of foreclosure.  You will have to play hard ball with them.


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## Passepartout

They bamboozled you with this 'investment' ruse. BULL! No timeshare in an investment. The ONLY value is in the vacations you can have and memories you will build. And those only happen if you use what you buy. You can offer the deed back, but they won't take it. You might claim hardship. You might sue for fraud, but they will play hardball with you, and they have platoons of lawyers, and have fine tuned their contracts to make them pretty much bullet-proof.

You could just default. Stop paying. But you would ( well, already have anyway) lose everything you've paid, and your credit WILL take a hit. Sorry. You missed your chance to rescind and can now learn to use your TS at leisure. 

About half of TUGgers bought their TSs at retail from the developer. You are in good company. The value you saw when you bought still exists, it just isn't an investment, and you simply overpaid. We've all done it.

Jim


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## wesflyfisher

Hardball? What leverage do I have? Is there something I can use to threaten/motivate them? Or am I pleading for mercy?


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## DeniseM

wesflyfisher said:


> Hardball? What leverage do I have? Is there something I can use to threaten/motivate them? Or am I pleading for mercy?



Your position:  I am not going to make any more payments, no matter what you do to me, so save yourself some money/hassle and take a deed back instead of having to go through the legal expense of foreclosing on me.  I will forfeit my deposit in lieu of foreclosure.

They may foreclose anyway (after turning you over to collections and putting the hurt on you to see if you will pay.)

They may let you deed it back.

No way to know.


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## wesflyfisher

Passepartout said:


> They bamboozled you with this 'investment' ruse. BULL! No timeshare in an investment. The ONLY value is in the vacations you can have and memories you will build. And those only happen if you use what you buy. You can offer the deed back, but they won't take it. You might claim hardship. You might sue for fraud, but they will play hardball with you, and they have platoons of lawyers, and have fine tuned their contracts to make them pretty much bullet-proof.
> 
> You could just default. Stop paying. But you would ( well, already have anyway) lose everything you've paid, and your credit WILL take a hit. Sorry. You missed your chance to rescind and can now learn to use your TS at leisure.
> 
> About half of TUGgers bought their TSs at retail from the developer. You are in good company. The value you saw when you bought still exists, it just isn't an investment, and you simply overpaid. We've all done it.
> 
> Jim




Hi Jim, thanks for your effort to try to make me feel better. Is there really no value in the shares when I hope to sell in 10-20 yrs. Should I deed it to my daughter or not saddle her w/ this albatross?

- Wes.


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## DeniseM

wesflyfisher said:


> Hi Jim, thanks for your effort to try to make me feel better. Is there really no value in the shares when I hope to sell in 10-20 yrs. Should I deed it to my daughter or not saddle her w/ this albatross?
> 
> - Wes.



There is no investment value - most timeshares sell for 0-10% of original retail on the resale market.


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## RuralEngineer

*value*



wesflyfisher said:


> Is there really no value in the shares when I hope to sell in 10-20 yrs.
> - Wes.



They have value and utility if used appropriately, i.e. vacations / in-lieu of a 2nd home, however due to restrictions on use they have no real resale value.

_The current business model is based on about 4% of points outstanding going back to the developer every year to be resold._

Stephen


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## kalima

*Darn*

you are deffo past the 7 day period so you are stuck with it IMO....You may as well learn to use it unless you haven't actually paid in cash for it....you could let them foreclose on you if you haven't yet paid for it and aren't worried about your credit score...please come join our facebook page: DRI Friends Worldwide where you can chat with other members Remember you can always book somewhere and then rent it out if you aren't able to use the week yourself...also I wouldn't will it to your kids unless they are wealthy.


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## wesflyfisher

RuralEngineer said:


> They have value and utility if used appropriately, i.e. vacations / in-lieu of a 2nd home, however due to restrictions on use they have no real resale value.
> 
> _The current business model is based on about 4% of points outstanding going back to the developer every year to be resold._
> 
> Stephen



I'm having a hard time wrapping my mind around this Diamond quagmire.

If the initial down payment was placed on AMEX card, could I cancel that transaction and default on all future Diamond payments, saving at least the mistake of my recent purchase? 

The cost would be a hit to my credit rating, and the lost of my original fully paid 30,000 point investment, as well as forfeiture of any future Diamond vacations. 

Is this worth it?

Still not sure how I should be thinking about all this?

- Wes.


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## DeniseM

The problem is that you paid a lot of money for something that is worth 0-10% of what you paid for it.

So you have to decide which is the lesser of two evils:

1)  Spend a lot of money for nothing.
2)  Take a hit on your credit

That's why it's better to make a big push to get them to take it back, and avoid these two options.

You can't file a dispute with your AMEX (well you can, but you will lose) because you signed a legally binding contract, which DRI will submit to AMEX to prove that the charge is legal and valid.  

Even in the best scenario - you are out the down payment.


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## wesflyfisher

DeniseM said:


> The problem is that you paid a lot of money for something that is worth 0-10% of what you paid for it.
> 
> So you have to decide which is the lesser of two evils:
> 
> 1)  Spend a lot of money for nothing.
> 2)  Take a hit on your credit
> 
> That's why it's better to make a big push to get them to take it back, and avoid these two options.
> 
> You can't file a dispute with your AMEX (well you can, but you will lose) because you signed a legally binding contract, which DRI will submit to AMEX to prove that the charge is legal and valid.
> 
> Even in the best scenario - you are out the down payment.



In this scenario, I ask if they take back the recent 30,000 and keep the old 30,000 and payments on it?

- Wes.


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## DeniseM

wesflyfisher said:


> In this scenario, I ask if they take back the recent 30,000 and keep the old 30,000 and payments on it?
> 
> - Wes.



That's an even more difficult proposition.  Are you still paying on the first purchase?

Even in the best  case scenario, you will not get any money back.

Important point:  Your sales person is not the guy to talk to about this.  He will just lie to you some more, he has no authority to do a deed back, and he doesn't want to lose the commission.


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## wesflyfisher

DeniseM said:


> That's an even more difficult proposition.  Are you still paying on the first purchase?
> 
> Even in the best  case scenario, you will not get any money back.
> 
> Important point:  Your sales person is not the guy to talk to about this.  He will just lie to you some more, he has no authority to do a deed back, and he doesn't want to lose the commission.



No, no, no. The first 30,000 was paid off a long time ago. I meant keep the original 30,000 points and continue paying maintenance on it.

Thx again, 

- Wes.


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## DeniseM

wesflyfisher said:


> No, no, no. The first 30,000 was paid off a long time ago. I meant keep the original 30,000 points and continue paying maintenance on it.
> 
> Thx again,
> 
> - Wes.



That's your call - if you aren't using them, you may want to give them away to get out from under the maintenance fee.  Giving them away will be a lot easier than getting DRI to take them back.


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## artringwald

Since you have platinum status, you can use your points to help pay the maintenance fees, although their benefits directory hints that they might take away that benefit. The benefits directory is online at:

https://cmsprod.diamondresorts.com/sites/default/files/US-Member-Benefits-Directory_12.pdf

It describes many ways you can use your points, so you should never have to let them expire.

I am among the many TUG members who bought from the developer before discovering TUG. We bought in 2004 before Diamond Resorts bought out Sunterra. We have passed through the 5 stages of grief and are now at Acceptance. We enjoy the DRI properties, especially the Point at Poipu and Kaanapali Beach Club, both of which are in the Hawaii Collection. The money is gone, but we're making the best of what we bought.


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## T_R_Oglodyte

Replying as DRI Hawaii Collection owner myself -who has some additional purchases from the developer with eyes wide open and has bantered with the sales force about "exit strategies" ....

As others have indicated, you should reckon that the points have no value in the resale market.  The only value they have is the value you receive from them by using them to get vacations.  

The points that I own are currently being sold by DRI on their sales floor for about $60,000.  When I'm no longer interested in owning I figure that DRI will be selling them for $100,000 or more.  I can't imagine won't continue to quietly accept deedbacks.  If someone is offering to give them for free something that they can sell for $100,000 I can't imagine a business model where they would refuse to accept the deedback.

That's my exit strategy. And if that doesn't work at that age I figure I won't care if they try to collect.


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## wesflyfisher

T_R_Oglodyte said:


> Replying as DRI Hawaii Collection owner myself -who has some additional purchases from the developer with eyes wide open and has bantered with the sales force about "exit strategies" ....
> 
> As others have indicated, you should reckon that the points have no value in the resale market.  The only value they have is the value you receive from them by using them to get vacations.
> 
> The points that I own are currently being sold by DRI on their sales floor for about $60,000.  When I'm no longer interested in owning I figure that DRI will be selling them for $100,000 or more.  I can't imagine won't continue to quietly accept deedbacks.  If someone is offering to give them for free something that they can sell for $100,000 I can't imagine a business model where they would refuse to accept the deedback.
> 
> That's my exit strategy. And if that doesn't work at that age I figure I won't care if they try to collect.



This board is great, and I have found some solice in hearing from others who share my plight. 

Still hard to believe there is no predicted resale value in 10-15 yrs. At one point, I was told they had a buy-back program. We'll see if one re-opens. Otherwise, I fear their business model is centered on receiving yrly maintenance fees on the points out there, that then automatically deed back to them upon bankruptcy or end-of-life...?


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## DeniseM

You have to realize that the sales people couldn't care less about any business model, or what happens down the road.  They only care about getting a commission TODAY.  They will say and do anything to make the sale, knowing that the only terms that are legally enforceable are those in writing in the contract.

You simply cannot believe the sales people - they lie for a living...


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## tschwa2

wesflyfisher,
What do you like about DRI and how do you usually use your points?  DRI is one of the developers that strips almost every possible benefit with resales. A resale buyer can only use points in the single trust collection.  They don't pay the Club fees but can not stay in any other resorts.  They do not get status from the number of points (gold, platinum, etc).  This is fairly normal with many systems.  DRI goes a bit further and also restricts resale owners from most of their traditional trusts from using one of the large exchange companies (RCI or DRI) to exchange for anything outside of the collection.  DRI also has fairly high MF's.  I just re-read a post from 2008 where an owner was saying that if they wanted to pay Marriott type (high) MF's they would expect more consistent Marriott type accommodations and amenities and Marriott type resale values.  Marriott has pretty much tanked but owners who bought $50,000-$80,000 in retail purchases or even better $10,000-$20,000 in resale purchases could expect $5,000-$20,000 when selling.  This is not the case with DRI.

If Diamond wanted to help the resale value, they might still restrict status but they could allow new owners to join the Club for a nominal fee $1000 or less and allow resale owners to exchange through II.  As it is the Club fees are so high that many owners are considering getting rid of DRI.  

So I don't see DRI points resale value going up.


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## artringwald

If the economy prospers, and people spend more money traveling, the resale prices could go up. If another recession comes and airfare prices escalate, resale prices could stay as low as they are now. Few can accurately predict the economy 10 months from now, much less than 10 years from now. Plan for the worst and you'll never be disappointed.

If you really want to dump everything, read this thread:

http://www.tugbbs.com/forums/showthread.php?t=224859


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## wesflyfisher

DeniseM said:


> The problem is that you paid a lot of money for something that is worth 0-10% of what you paid for it.
> 
> So you have to decide which is the lesser of two evils:
> 
> 1)  Spend a lot of money for nothing.
> 2)  Take a hit on your credit
> 
> That's why it's better to make a big push to get them to take it back, and avoid these two options.
> 
> You can't file a dispute with your AMEX (well you can, but you will lose) because you signed a legally binding contract, which DRI will submit to AMEX to prove that the charge is legal and valid.
> 
> Even in the best scenario - you are out the down payment.




Dear Denise, 

I'm finally coming to the realization of what I've just done, and the magnitude of it. The money is lost, and the vacations the points will bring me are not hardly worth the maintenance fees they cost. Will take your suggestion and call later today the financial officer who processed my transaction.

Question - just learning about terms such as foreclosure. Not as concerned about my credit rating, but could they be successful in squeezing the amt owed to them by putting a lien (is this the right word?) on my paycheck or getting into the value of my house. Even more hardball, can bankruptcy work to disband of my DRI obligation? 

Very financially naive, obviously, 

- Wes.


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## wesflyfisher

artringwald said:


> If the economy prospers, and people spend more money traveling, the resale prices could go up. If another recession comes and airfare prices escalate, resale prices could stay as low as they are now. Few can accurately predict the economy 10 months from now, much less than 10 years from now. Plan for the worst and you'll never be disappointed.
> 
> If you really want to dump everything, read this thread:
> 
> http://www.tugbbs.com/forums/showthread.php?t=224859



Thanks very much for all the helpful info you've provided. Regarding the deedback, your balance needs to be zero. Unfortunately, my balance is at its max.


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## DeniseM

Clarification:  DRI can accept a deed back anytime regardless of your balance - so it's not that they "can't" - they just don't want to.  If you actually stop making the payments they may or may not reconsider.  

To declare bankruptcy, you must be on the verge of financial collapse - not just have one debt that you have buyers remorse about.  I hope you didn't buy additional points if you are in that type of financial situation to begin with.

Sent from my BNTV400 using Tapatalk


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## wesflyfisher

DeniseM said:


> Clarification:  DRI can accept a deed back anytime regardless of your balance - so it's not that they "can't" - they just don't want to.  If you actually stop making the payments they may or may not reconsider.
> 
> To declare bankruptcy, you must be on the verge of financial collapse - not just have one debt that you have buyers remorse about.  I hope you didn't buy additional points if you are in that type of financial situation to begin with.
> 
> Sent from my BNTV400 using Tapatalk



Denise, 

I am ashamed to admit it, but I am in a world of debt, and max'd out borrowing against my house (home improvement loan) for house renovation, and now this purchase, which I thought was a unique investment opportunity. Don't know much about bankruptcy, and certainly don't want to lose my house. I've read that there is a type of bankruptcy called Chapter 13 that would allow me to keep certain assets, ie house.

I make a good income, but just barely enough to clear the debts that I owe prior to the DRI purchase, and now w/ the DRI purchase, will be struggling to make payment on their loan given at an interest rate that's pretty high...

I know, shame on me.

In this situation, I wonder how this reality might change their ability to actually foreclose on me if I didn't go the bankruptcy route?

Thanks, grasping at straws... any advice welcomed,

- Wes.


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## Passepartout

Wes, I think maybe you should make an appointment with a lawyer who specializes in bankruptcy. My wife does, but doesn't practice where you live. You need some financial guidance, my friend. It may not include BK, but you should at least get some guidance in how to budget, tear up your credit cards, make a plan. BK isn't for everyone, it's meant for people who through no fault of their own- unexpected loss of job, illness, accident- can get a fresh start. It's NOT to get people out from under unwise consumer debt. Belt-tightening, budgeting, extra jobs, and stopping spending on non-necessities are the solution there.

There is a possibility that after seeing this lawyer, or even Consumer Credit Counselling, they will generate letters to some of your creditors- DRI included- that might compel them to accept lower interest, lower payments, even forgiving some debt, in lieu of you bankrupting out of their debt entirely. Yes, in Chapter 13, a plan is made that exempts your house, car and other necessities, but that's for your lawyer to explain to you AFTER you fill out the worksheet to see what- if ANY court approved plan may or may not be available to you.

I think you should consider this call sooner rather than later.

I wish you well....

Jim


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## wesflyfisher

Passepartout said:


> Wes, I think maybe you should make an appointment with a lawyer who specializes in bankruptcy. My wife does, but doesn't practice where you live. You need some financial guidance, my friend. It may not include BK, but you should at least get some guidance in how to budget, tear up your credit cards, make a plan. BK isn't for everyone, it's meant for people who through no fault of their own- unexpected loss of job, illness, accident- can get a fresh start. It's NOT to get people out from under unwise consumer debt. Belt-tightening, budgeting, extra jobs, and stopping spending on non-necessities are the solution there.
> 
> There is a possibility that after seeing this lawyer, or even Consumer Credit Counselling, they will generate letters to some of your creditors- DRI included- that might compel them to accept lower interest, lower payments, even forgiving some debt, in lieu of you bankrupting out of their debt entirely. Yes, in Chapter 13, a plan is made that exempts your house, car and other necessities, but that's for your lawyer to explain to you AFTER you fill out the worksheet to see what- if ANY court approved plan may or may not be available to you.
> 
> I think you should consider this call sooner rather than later.
> 
> I wish you well....
> 
> Jim



Hi Jim, 

Really appreciate your advice. 

I was preparing to call the Diamond financial officer per Denise's suggestion, as well as contact a bankruptcy lawyer, when I looked thru my paper work. 

There is a Notice of Mutual Right to Rescind that was never signed by me or DRI! 

Could this be an out for me!!! Having never seen the form, this is why I did not know of the 7 days rescind limit.

- Wes.


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## tschwa2

wesflyfisher said:


> when I looked thru my paper work.
> 
> There is a Notice of Mutual Right to Rescind that was never signed by me or DRI!
> 
> Could this be an out for me!!! Having never seen the form, this is why I did not know of the 7 days rescind limit.
> 
> - Wes.



Just because you don't have a signed copy doesn't mean that DRI doesn't have a signed copy.  You probably initialed and signed many copies of many pages.  The fact that you have a copy of the notice means that you were notified and unless the state you bought in requires that the notice be signed by you and the developer and that did not happen then you really don't have an out.  You could lie (throw the paper away) and say you never received any paperwork indicating that you had a right to rescind and if DRI can't prove otherwise in court than you may have an out.


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## wesflyfisher

tschwa2 said:


> Just because you don't have a signed copy doesn't mean that DRI doesn't have a signed copy.  You probably initialed and signed many copies of many pages.  The fact that you have a copy of the notice means that you were notified and unless the state you bought in requires that the notice be signed by you and the developer and that did not happen then you really don't have an out.  You could lie (throw the paper away) and say you never received any paperwork indicating that you had a right to rescind and if DRI can't prove otherwise in court than you may have an out.



I am virtually certain there is no signed Right to Rescind Form. I believe what happened is that amongst all the pages, the form was bypassed as it may have stuck to the bottom of the pg on top, basically, like turning 2 pgs at once. I was paying attention for a rescind limit, and was only aware of her circling a 21 day limit, but now know this was only for inquiries regarding the transaction for the next 21 days. She had told me the contract would be in escrow for about 21 days, again leading me to believe this is how much time I had to rescind.

Interesting what you say about some States not necessarily requiring a sig, as well as your challenge to have them prove I was informed of the Rescind limit.

Should I be consulting w/ a lawyer now and not talking to DRI - showing them "my hand"?

Thx so much, 

- Wes.


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## DeniseM

A lawyer probably can't help you much, unless you are consulting them about bankruptcy. 

DRI has a lot of smart lawyers who expect a large percentage of buyers to want out, so they write the contracts to make that very difficult.

Remember that the only thing that is legally binding is the info. in writing - the contract - which you signed.   The fact that they did not verbally review everything in the contract, does not change that fact.  Even if they blatantly lied to you, what you were told verbally is not binding, and it says that right in the contract.

_BTW - This kind of baloney is standard procedure in timeshare sales.  
_
It wouldn't hurt to consult an attorney, but it will probably cost $100 bucks for an initial consultation, and they will probably just tell you that you signed a legally binding contract.

About the only cheap thing you could do is to ask an attorney to write a stern letter stating that you were denied your right to rescind, because the rescission instructions were not reviewed with you, or signed, and on that basis, you are rescinding now.

It's a long shot, and it will be completely up to DRI, whether they decide to play hard ball or not.

If you are talking about actually suing DRI - that is an extremely expensive proposition, and just not realistic.


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## wesflyfisher

DeniseM said:


> A lawyer probably can't help you much, unless you are consulting them about bankruptcy.
> 
> DRI has a lot of smart lawyers who expect a large percentage of buyers to want out, so they write the contracts to make that very difficult.
> 
> Remember that the only thing that is legally binding is the info. in writing - the contract - which you signed.   The fact that they did not verbally review everything in the contract, does not change that fact.  Even if they blatantly lied to you, what you were told verbally is not binding, and it says that right in the contract.
> 
> _BTW - This kind of baloney is standard procedure in timeshare sales.
> _
> It wouldn't hurt to consult an attorney, but it will probably cost $100 bucks for an initial consultation, and they will probably just tell you that you signed a legally binding contract.
> 
> About the only cheap thing you could do is to ask an attorney to write a stern letter stating that you were denied your right to rescind, because the rescission instructions were not reviewed with you, or signed, and on that basis, you are rescinding now.
> 
> It's a long shot, and it will be completely up to DRI, whether they decide to play hard ball or not.
> 
> If you are talking about actually suing DRI - that is an extremely expensive proposition, and just not realistic.



Arrg, it just doesn't seem right.... the nightmare continues.


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## DeniseM

Well…..it's not a matter of right and wrong - very few developer presentations are totally above board and ethical - this is a matter of legal or not legal.


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## TheWizz

wesflyfisher said:


> Arrg, it just doesn't seem right.... the nightmare continues.



IF you can get rid of the new 30K points and keep the original points, assuming you'd be back to Elite Gold level.  One option to do to get "some" of your MF $ back is to book a cruise for 9-12 mo. in the future before the deadline (July 31 for Gold) that would cost more than $2700.  Then use your 30K points for the cruise and DRI will mail you a check for $2700.  As soon as you get the check, cancel the cruise and get your deposit back.  I've done this a few years in the past when I couldn't use my points.  When I first did this, the costs of my 30K points (via deeded resorts converted) was almost the same as the cruise value.  Now, of course w/ higher and higher MFs, it is no longer a 1-to-1 ratio, but still better than losing all the MFs paid.   I own two deeds at Polo Towers and one at Fall Creek and plan to "sell" them all before EOY for whatever I can get to be done with DRI after this year.  I've enjoyed many vacations via DRI points in the past, but the MF increases aren't worth it any longer so I needed to choose between my DRI and HGVC points.  DRI lost.  

Best of luck to you in trying to get out of the new points deal.


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## wesflyfisher

D ear TheWizz, 

Thanks for your excellent suggestion and well wishes. We'll see if this can work!


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## Bill4728

STOP!!

Do not do anything at this time.

You have a situation which most of the advise you have gotten here is wrong. I believe that if you default on your new purchase DRI will consider your entire ownership in default. That means your $30,000 investment from 8 years ago is gone too.   If you only had the new purchase the advise would be " walk away from the deposit and take a hit on your credit" BUT now the advice should be " if you walk away you'll be walking away from both the original purchase and your new purchase. Do you really want to do that? "

I'm sorry not sure I'd be willing to walk away from both and lose my deposit and the $30K I already paid. 

Good Luck


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## wesflyfisher

Bill4728 said:


> STOP!!
> 
> Do not do anything at this time.
> 
> You have a situation which most of the advise you have gotten here is wrong. I believe that if you default on your new purchase DRI will consider your entire ownership in default. That means your $30,000 investment from 8 years ago is gone too.   If you only had the new purchase the advise would be " walk away from the deposit and take a hit on your credit" BUT now the advice should be " if you walk away you'll be walking away from both the original purchase and your new purchase. Do you really want to do that? "
> 
> I'm sorry not sure I'd be willing to walk away from both and lose my deposit and the $30K I already paid.
> 
> Good Luck



Hi Bill, I appreciate your advice. Taking all things into consideration...   haven't decided yet.

Looking into timeshare donation to get some value back, but this may be a scam as well.

- Wes.


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## taterhed

If you hit 'search' and timeshare donation, you'll quickly find out that almost ALL timeshare donations are scams.

If you are really serious, post the complete information (name,address,phone, website, etc...) of the supposed donation site here on the board.

you will get immediate feedback--probably not good feedback.

jmho


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## wesflyfisher

Does anyone know if the type of time share I own w/ DRI - points in the HI collection, as opposed to a deeded week - can qualify as a rental property/business wherein I can take a  non-capital loss upon eventual sale, using the retail price I paid as the cost basis, especially if I never use the property for personal use and have just purchased the timeshare?

I base this upon the article posted on this web site on "timeshare and taxes" which I'll paste below:



Income Taxes and Timeshares 
© Dave McClintock

Dave McClintock (CPA) 

Contact: Send a private message or e-mail to “Dave M” on the BBS http://www.tugbbs.com

Topics:

Selling your Timeshare
Deductible Items
Donating your Timeshare To Charity
Rental Income and Losses
Vacation Home Rules
Selling your Timeshare – Gains & Losses
Any profit on the sale of your timeshare is taxable.  If you sell at a loss, the loss is normally not deductible. 

Profit on sale is treated as capital gain, subject to favorable tax rates if owned for more than one year. For gain purposes, your cost is generally your original cost, plus additions for the following items: (1) closing costs incurred when you purchased your timeshare, (2) the portion of your annual maintenance fee (for all years owned) allocated to capital reserves or used specifically for capital improvements (such as a new roof), and (3) any special assessments for capital improvement purposes which you paid.  This amount should be reduced by any depreciation expense in years you rented the timeshare. 

If you (and/or relatives or friends) use the timeshare, exchange it or let it go unused, a loss on sale will be personal and not deductible, just as a loss on the sale of your home or your car would not be deductible. Even though your intent might be to hold it as an investment, your personal use results in no tax loss being allowed upon sale.

If you regularly rent the timeshare to others, a loss on sale might be an allowable business loss. If you have an allowable business loss on sale of your timeshare, it is deductible as an ordinary (non-capital) loss.

If you expect to sell at a loss, should you convert the timeshare to rental property to ensure deductibility of the loss?

It isn’t that simple. If you convert property from personal to rental/business/ use, the basis (i.e., cost as determined for tax purposes) for determining gain is what you paid, as described above, just as if you hadn’t converted to rental use.  However, the basis for determining loss is the lower of cost or fair market value on the date of conversion to rental use. Fair market value is to be determined based on the value in your market (i.e., the resale market), not the price you paid to the developer.

Thus, for example, if you buy a timeshare from a developer for $12,000 and the resale value when you convert to rental use is $4,000, that $4,000 is what you should use as your basis (or tax cost) for determining loss on sale if you sell it while holding it for rental use. As explained in the Rental Income section below, that would also be the value used for claiming depreciation.

In addition, the IRS might disallow the loss if you sell the timeshare before renting it for several consecutive years, since isolated transactions (such as renting a timeshare unit for one week) generally do not convert a personal investment into a business investment for IRS purposes. Also, no loss on sale would be allowed if you convert it back to personal use before selling.


Deductible Items (e.g., Taxes and Interest)
Unless you rent your timeshare to others, you might have no deductible amounts related to the timeshare.

However, if the property taxes applicable to your unit are billed separately to you (such as in California), those are deductible. They should also be deductible if your resort shows them as a separate item on your maintenance fee billing. However, if you have to seek out the tax amount applicable to your unit by examining the financial statements, the taxes are not deductible.

A few owners can deduct the interest expense on a timeshare loan. The interest is deductible only if the loan is secured by the timeshare as a mortgage and you deduct no other mortgage interest except on your primary home. Note that most timeshare loans don't qualify because they are written as consumer loans rather than as mortgages. Similarly, interest expense on credit card debt used to finance the purchase would not be deductible.

If your timeshare was financed with a home equity loan on your personal residence or by refinancing your mortgage on that residence, the interest is generally deductible, subject to certain limitations.

Can you deduct interest on loans for more than one timeshare? If you have a mortgage on your primary residence, interest paid on loans on multiple timeshare properties would not be deductible, since interest in connection with only one property other than the primary residence can be deducted. But suppose the multiple timeshares are all at one resort. You might reasonably view these multiple timeshares as one "residence". The tax rules aren’t clear on this issue.

Forget about trying to use your timeshare in your business to get depreciation, MFs and other deductions. There is a rule in the tax law that prohibits any business deduction pertaining to an "entertainment facility". Timeshares fit into that category. There are a very few narrow exceptions to this rule.

Your annual maintenance fee is not deductible. This annual fee for utilities, pool care, lawn care, other maintenance, management, and other expenses can be compared to similar expenditures that you might incur on your primary residence, which are also not deductible.

Donating your Timeshare To Charity
A frequent question at TUG is, “Should I donate my timeshare to charity?” That often translates to, “I can’t sell my timeshare and have been told the tax benefit may exceed the sales price on the open market.” The answer is "Yes!", if you have a charitable motive and "No!", as it relates to that expected tax benefit.

If donating a deeded timeshare, the deductible contribution amount will normally be equal to the Fair Market Value (FMV) on the date of donation. That’s the price that an arms-length buyer and seller in the timeshare resale market would agree upon, not what the developer is charging for that same week. If the FMV exceeds $5,000, you’ll need a written appraisal that meets IRS guidelines. If the sale of the property would have resulted in a short-term gain, the FMV must be reduced by this amount.

Right to Use (RTU) timeshares and non-deeded points timeshares are tangible personal property to which additional rules apply. If the charity’s use of the property is unrelated to its primary function (for example, if sold at an auction), the FMV must be reduced by the amount of any gain that would have resulted had the property been sold by the taxpayer.

So, why can’t the tax benefit justify a donation? It’s relatively simple. FMV is normally the same as what you would sell your timeshare for. Since the highest federal tax bracket is 35%, you’re better off selling and pocketing the cash. For example, if you sell your timeshare for $1,000 (the FMV), you’ll have $1,000 in your pocket. If you donate the timeshare, your deduction should be $1,000 and your federal income tax savings would put, at most, $350 (35% x $1,000) in your pocket.

Keep in mind that appraisals aren’t cheap (most cost $500 or more) and the cost of the appraisal isn’t considered a charitable contribution.

Another frequent question is, "Can I get a tax deduction if I donate the use of my week to a charity?" The answer is “No”.  IRS regulations won’t allow a charitable deduction for the gift of a right to use property. Donate the use of a week because you are charitable, but you can't deduct any value associated with the use of the week.

Rental Income and Losses
If you rent your timeshare, you can deduct all current expenses, including depreciation, advertising, rental commission and maintenance fees against the rental income.

Special assessments for remodeling, roof and furniture replacement and similar expenditures would not be deductible. Special assessments for repairs and unexpected current expenses might be deductible, depending on the nature of the expenses. Travel expenses to check on your timeshare will normally not be deductible because, as discussed below, your timeshare rental won’t qualify as a “business”, as is required for such a deduction.

How do you calculate depreciation expense? If your timeshare is newly purchased, you can base your claimed depreciation expense on your purchase cost. However, if you have previously used your timeshare for personal purposes (including an exchange or use by friends or family), you must base your depreciation on current value - which means resale value - as of the date you convert to rental use.

Assume the cost or value to use for depreciation is $5,000. The first year's deduction, based on an IRS table, should normally be 3.485% of that amount, or $174.25.

If deducting expenses from rental income results in net rental income for the year, it's taxable. If you have a net rental loss, you cannot deduct the loss. How come?

First, it's certainly legitimate to deduct rental expenses to offset rental income. However, with timeshare rentals, there are some significant limitations if you incur a loss. 

Assuming that like most timeshare owners, you typically rent to tenants for one week or less at a time, your rentals don't qualify as a "rental" business. A special section of the Income Tax Regulations prohibits treating your loss as a “rental loss” if the average rental period for a particular tenant is seven days or less. 

Even most tax advisors are not aware of this rule. Your tax advisor can review §1.469-1T(e)(3)(ii)(A) of the Temporary Income Tax Regulations. This regulation is also referred to in IRS Letter Ruling #9505002, which gives an indication of the IRS position on this issue as it relates to timeshares, as discussed above. 

So what happens to the loss if it's not treated as a business rental loss? It falls into the passive activity loss rules of §469 of the Internal Revenue Code. Those rules prohibit deducting such losses except against other passive activity income. Such income is narrowly defined and doesn't include, for example, dividends, interest or other investment income. 

Thus, you're pretty much stuck with carrying over such losses to use against positive taxable income from your rental activities in future years. You can also deduct any carryover losses related to a rental property in the year you sell that timeshare.

There are a number of complex rules that could change the result here - including the vacation home rules, rules relating to renting to tenants for longer than one week at a time, etc.

Vacation Home Rules
Wouldn't the vacation home tax rules apply to a rental gain, allowing you to avoid reporting the income, because you rented the property for fewer than 15 days? No, the vacation home tax rules will usually not apply. Thus, you must report the rental profit - whether you own one week or a number of weeks. 

The vacation home rules apply only if you use the "vacation home" for at least 15 days each year for personal purposes. A timeshare can qualify as a vacation home. However, unless you own at least four weeks at a single resort, using at least three of the weeks for personal purposes, you can't take the benefit of excluding the income from renting the fourth week, because there is no practical way that you could use your timeshare for at least 15 days and rent it out to others.

Thus, in almost every situation, you must report the rental profit. You can also offset losses from some rentals against profits on others to minimize your net taxable income, but deducting a net loss is still subject to the rules above.


Important Note

Many tax return preparers improperly handle the last two topics, dealing with rental losses and the vacation home rules. Consider taking a copy of the pertinent sections of this article to your tax advisor.

The conclusions in this article are the opinions of the author, and are not intended as a substitute for that of your personal tax advisor. Make sure you get professional advice when preparing your tax return.


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## TUGBrian

can you provide proof that you used this interval as a business (rentals) regularly?


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## tschwa2

It looks like you would have to rent out several weeks a year for several years with no personal use before selling.  Do you have enough points to do this?  You would have to keep meticulous notes and paperwork documenting this business venture.


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## TUGBrian

indeed, its not a matter of what you can fill out on your taxes...you can put whatever you want there =)

its a matter of what the IRS will believe if you are ever challenged on the matter, if you are not actually renting this unit out as a legitimate business for income etc (and paying the appropriate taxes for that business separately)....this is likely to be a very bad idea!


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## wesflyfisher

TUGBrian said:


> indeed, its not a matter of what you can fill out on your taxes...you can put whatever you want there =)
> 
> its a matter of what the IRS will believe if you are ever challenged on the matter, if you are not actually renting this unit out as a legitimate business for income etc (and paying the appropriate taxes for that business separately)....this is likely to be a very bad idea!



To Brian and Tschwa2, 

I have 30,000 points, enough for 3 weeks of rental. This was just purchased this March, and has never been used (yet). I can keep meticulous records. Not sure what is meant by "legitimate business" and paying separate taxes for this entity...?

The key Q is if I do all of the above, can I use the "retail price" payed (since it was just purchased, and has not/will never be be used by myself/family/friends) as the cost basis for determining my loss in the event of a sale 3-5 yrs down the road. If fair market value/resale value is used as the cost basis, this idea is a no go. Thx.


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## Dave M

wesflyfisher said:


> Does anyone know if the type of time share I own w/ DRI - points in the HI collection, as opposed to a deeded week - can qualify as a rental property/business wherein I can take a  non-capital loss upon eventual sale, using the retail price I paid as the cost basis, especially if I never use the property for personal use and have just purchased the timeshare?



Hi, Wes. I'm the guy that wrote the tax article you quoted.

There are two separate tax issues to consider.

The first 30,000 points that you purchased in 2008 are deemed to be personal assets, not business assets. Even if you had never used the points, the fact that you have not aggressively advertised for rental users, makes them personal assets in the eyes of the IRS. Thus, if you eventually sell them, the cost would be deemed to be the fair market value in the resale market, likely what you are able to sell the points for. If you convert those points to a rental operation now, the "cost" is deemed to be the resale value at the time of conversion. Thus, forget about any benefit from eventually selling those points.

The 30,000 points you purchased this year could generate a tax loss based on your purchase price upon sale if you actively seek to rent the points each year and do not use them for any personal use. However, the tax benefit in whatever tax bracket you will be in when you sell the points will be less than what you will have to come up with to pay off what you owe. By example, if you pay $10,000 for an asset and later sell it for $1,000, you have a $9,000 loss. If you are in a 30% bracket (combined federal and state) and can legitimately claim a tax loss, you will reap a tax benefit of $2,700 (30% X $9,000). Thus, you would be paying $10,000 to recoup $2,700 of tax benefit for a net loss of $7,300. Not good math! 

Accordingly, it still comes back to whether it's worth it to you from a personal standpoint to continue with your purchase or try to get this albatross off of your shoulders.

Dave


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## TUGBrian

talk about a blast from the past!  Welcome back Dave!

Hope you are doing well sir!


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## wesflyfisher

Dave M said:


> Hi, Wes. I'm the guy that wrote the tax article you quoted.
> 
> There are two separate tax issues to consider.
> 
> The first 30,000 points that you purchased in 2008 are deemed to be personal assets, not business assets. Even if you had never used the points, the fact that you have not aggressively advertised for rental users, makes them personal assets in the eyes of the IRS. Thus, if you eventually sell them, the cost would be deemed to be the fair market value in the resale market, likely what you are able to sell the points for. If you convert those points to a rental operation now, the "cost" is deemed to be the resale value at the time of conversion. Thus, forget about any benefit from eventually selling those points.
> 
> The 30,000 points you purchased this year could generate a tax loss based on your purchase price upon sale if you actively seek to rent the points each year and do not use them for any personal use. However, the tax benefit in whatever tax bracket you will be in when you sell the points will be less than what you will have to come up with to pay off what you owe. By example, if you pay $10,000 for an asset and later sell it for $1,000, you have a $9,000 loss. If you are in a 30% bracket (combined federal and state) and can legitimately claim a tax loss, you will reap a tax benefit of $2,700 (30% X $9,000). Thus, you would be paying $10,000 to recoup $2,700 of tax benefit for a net loss of $7,300. Not good math!
> 
> Accordingly, it still comes back to whether it's worth it to you from a personal standpoint to continue with your purchase or try to get this albatross off of your shoulders.
> 
> Dave



Hi Dave, 

Wow, I can see from Brian's response that you are quite a legend on the board. I'm lucky to talk w/ you, thanks so much!

It tis "bad math", but still might be the lesser of two evils. The value of my shares (30,000 points) on the resale market is probably only $0.33/point, so $10K could be recouped minus any title transfer fees (estimated up to $4K). 

Whereas, as a rental business, if I sell at 10K after renting for 3 yrs, I could claim upwards of 90K-10K x 0.35, or 28K in tax relief. Then there might be depreciation, interest relief after using home loan to finance, etc.

The key is using the retail price paid as the cost basis. To ensure this, aside from aggressively marketing the rental at this time, is there something I need to do or can do in the eyes of the IRS to secure "rental business" status?

Will personal use of my first 30,000 shares complicate the IRS interpretation of rental business... if so, would be willing to somehow rid myself of the shares.

If my tax accountant is skeptical, is there a place I can direct him to read up on this, or find someone new who is more expert?

So very much appreciated!

- Wes.


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## artringwald

wesflyfisher said:


> Hi Dave,
> 
> It tis "bad math", but still might be the lesser of two evils. The value of my shares (30,000 points) on the resale market is probably only $0.33/point, so $10K could be recouped minus any title transfer fees (estimated up to $4K).
> 
> - Wes.



I'm afraid that getting $0.33/point is very optimistic, especially for 30,000 points. It's not easy giving them away because the maintenance fees are so high. There are some great properties in the collection, but it's cheaper to buy deeded weeks to avoid the 45% overhead that DRI charges to manage the trust.


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## Dejlim

Hi I want out of ours too and still owe loan. If we foreclose will DRI sue? - sorry I'm new in this website and not sure how to use it. I keep posting here for some reason


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## Dejlim

wesflyfisher said:


> Thanks very much for all the helpful info you've provided. Regarding the deedback, your balance needs to be zero. Unfortunately, my balance is at its max.



Wes did you find out? I'm on the same boat and wants to foreclose


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## Dejlim

Hi will they only hit your credit or sue? I'm on the same boat...


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## Dejlim

*Advice urgent!*



Bill4728 said:


> STOP!!
> 
> Do not do anything at this time.
> 
> You have a situation which most of the advise you have gotten here is wrong. I believe that if you default on your new purchase DRI will consider your entire ownership in default. That means your $30,000 investment from 8 years ago is gone too.   If you only had the new purchase the advise would be " walk away from the deposit and take a hit on your credit" BUT now the advice should be " if you walk away you'll be walking away from both the original purchase and your new purchase. Do you really want to do that? "
> 
> I'm sorry not sure I'd be willing to walk away from both and lose my deposit and the $30K I already paid.
> 
> Good Luck



We are willing to walk away on both in our case, but worried they will sue... Will they or just take a credit hit? Need advice urgent!


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## pedro47

Welcome back Dave M !!!!


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## TUGBrian

There is always a risk that they will indeed turn you over to collections and foreclose yes....but that same risk exists when walking away from any financial obligation.


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## chexchy

*use points to pay MF*



artringwald said:


> Since you have platinum status, you can use your points to help pay the maintenance fees, although their benefits directory hints that they might take away that benefit. The benefits directory is online at:
> 
> https://cmsprod.diamondresorts.com/sites/default/files/US-Member-Benefits-Directory_12.pdf
> 
> It describes many ways you can use your points, so you should never have to let them expire.
> 
> I am among the many TUG members who bought from the developer before discovering TUG. We bought in 2004 before Diamond Resorts bought out Sunterra. We have passed through the 5 stages of grief and are now at Acceptance. We enjoy the DRI properties, especially the Point at Poipu and Kaanapali Beach Club, both of which are in the Hawaii Collection. The money is gone, but we're making the best of what we bought.



I had browsed the website.  I am not sure where that mentioned you can use your point to pay for MF.  At what value is your point ($.10/pnt)?  Is it woth it to use your points for MF?
When I went to Las vegas using my GMV, he talked me into buying the sampler package.  He told me to buy 15000 DRI points.  In addition to my GMV (133 points) I could use half of my total points for MF and half of it for vacation.  I am in the point of giving away my GMV.  My husband just didn't want to let go of $10,000 we paid 10 years ago.
Now I have the option to use the sampler (15000 pnt for $3000) or to pay another $7000 for additional 15000 pnt/yr.  How many DRI points are my 133 GMV ponits worth?  Is it worth it? Since I have to pay MF for my GMV anyway or should I deed back my GMV points to DRI?


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## Ty1on

chexchy said:


> I had browsed the website.  I am not sure where that mentioned you can use your point to pay for MF.  At what value is your point ($.10/pnt)?  Is it woth it to use your points for MF?
> When I went to Las vegas using my GMV, he talked me into buying the sampler package.  He told me to buy 15000 DRI points.  In addition to my GMV (133 points) I could use half of my total points for MF and half of it for vacation.  I am in the point of giving away my GMV.  My husband just didn't want to let go of $10,000 we paid 10 years ago.
> Now I have the option to use the sampler (15000 pnt for $3000) or to pay another $7000 for additional 15000 pnt/yr.  How many DRI points are my 133 GMV ponits worth?  Is it worth it? Since I have to pay MF for my GMV anyway or should I deed back my GMV points to DRI?



Does it make sense to buy points to use to pay MFs?  I'm not trying to belittle you in any way.  Everything they sell you has a profit motive.  If it were efficient to use those purchased points to pay MF, it seems like there would be no profit in it for the developer.


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