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victor56
185 Posts |
 Posted - 11/06/2009 : 11:15:25 PM
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| Is it possible for a seller to offer owner financing if he still owes a mortgage on the property? Example, if I still owe my house to Citi MTG, can I offer owner financing to someone who wants to buy it? Reason I ask is because I have someone who just told me he is paying his landlord on an owner finance deal but the landlord still owes the property to a bank and my customer just didnt sound very educated about the entire process and he feels as if he got ripped off. I asked for him to bring me the paperwork so I can review it. Is all this possible? |
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nowbroker
2586 Posts |
Posted - 11/07/2009 : 6:01:37 PM
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It is possible but highly risky. Most all institutional real estate loans have a "due on sale" clause" that the lender can call the note due and payable upon a non-approved sale. Other than some adjustable rate loans they are automatically due. The adjustable notes have clauses that require the lender to approve the new buyer.
Real estate loans without an acceleration clause or due on sale clause went out in the 1970's. |
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victor56
185 Posts |
Posted - 11/07/2009 : 9:57:29 PM
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quote:
Originally posted by nowbroker
It is possible but highly risky. Most all institutional real estate loans have a "due on sale" clause" that the lender can call the note due and payable upon a non-approved sale. Other than some adjustable rate loans they are automatically due. The adjustable notes have clauses that require the lender to approve the new buyer.
Real estate loans without an acceleration clause or due on sale clause went out in the 1970's.
How would I know if his loan has a due on sale clause? |
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nowbroker
2586 Posts |
Posted - 11/08/2009 : 07:49:45 AM
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| Get a copy of the note, it will have a section on transfers of ownership. |
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Money4u
1756 Posts |
Posted - 11/08/2009 : 5:58:47 PM
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POSSIBLE (no guarantees, have your client consult and Attorney) he may be able to sell, using a Lease Option. To be drawn up by the Attorney.
Longest LO I have seen, that worked and closed, was one I did. Borrower went through 2 Mortgage Brokers and his own Bank, before he found me. He had a LO, at $300/month, over market rents, for 3 years. Then, near the end of the 3 years, the Seller got Cancer, went to Mexico, took treatments(she lived, so, at least they did no harm). My Client continued to make payments to her Bank Account, for 4 YEARS after the agreement expired. This was 1990-96. When she came back, took and split the Value, now $450,000 and the $260,000 option price, gave him the home at $350,000 and I found a Lender (took me Two Months) to do the deal, using the excess rent as credit. Again, the First three years he had been paying Wayyy more than Market. The Excess rent, came to him, as a credit and he used that for his Down Payment.
Tough deal.
Use some Creativity. Get paid for setting it up, bring in the Attorney, creating the opportunity, whatever. Make a deal, go on to the next one.
Regards
Chris |
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