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rjb
Pilot/New Investor
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Seasoning Of Loans
Sunday, July 08 2007 11:10 AM
Randy, Marty and Forum,
Heard from a number of investors in California that it is becoming increasingly more difficult to purchase, rehab, and flip properties to end buyers due to the subprime and default fallout...What I mean is that lenders are looking to see who is on title and for how long. Some refuse to touch loans that have had title change hands withing 3, 6, and sometimes 12 months. Has anyone heard of this? I have only read the basic land trust course, but having a very rudimentary understanding of the subject, they seem to be an answer to this issue. Say it was a subject to deal that you wanted to turn around and sell to someone on your buyers list. Couldn't you secure the contract for the purchase price and then have the owner transfer the home over into a land trust with them being the beneficiary, you have a trustee of your choice, be the director of the trust, and have them sign over their beneficial interest. This way, the title does change over to the trustee, but you can show the lender that the beneficiary of the trust is still the original owner. I heard of people using an affidavit of trust to do this. Not sure what that is? Meanwhile, you sell the property to the endbuyer and execute a double closing. The check is made out to your trustee and you control the beneficial interest via assignment. Sounds like a creative way to structure this. Will have to run it by an attorney first of course. My last question is this, so subject to deals need to be on a any special contract or just the standard contract for your state and do they have to contain any special wording. Thanks
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Randy Hughes
Master Advisor-39 years of experience
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Re:Seasoning Of Loans
Sunday, July 08 2007 08:20 PM
Heard from a number of investors in California that it is becoming increasingly more difficult to purchase, rehab, and flip properties to end buyers due to the subprime and default fallout...What I mean is that lenders are looking to see who is on title and for how long. Some refuse to touch loans that have had title change hands withing 3, 6, and sometimes 12 months. Has anyone heard of this? I have only read the basic land trust course, but having a very rudimentary understanding of the subject, they seem to be an answer to this issue. Say it was a subject to deal that you wanted to turn around and sell to someone on your buyers list. Couldn't you secure the contract for the purchase price and then have the owner transfer the home over into a land trust with them being the beneficiary, you have a trustee of your choice, be the director of the trust, and have them sign over their beneficial interest.
YES, THIS WILL WORK. I THINK YOU ARE DEFINITELY UNDERSTANDING THE LAND TRUSTS MADE SIMPLE COURSE!
This way, the title does change over to the trustee, but you can show the lender that the beneficiary of the trust is still the original owner. I heard of people using an affidavit of trust to do this. Not sure what that is? Meanwhile, you sell the property to the end buyer and execute a double closing. The check is made out to your trustee and you control the beneficial interest via assignment. Sounds like a creative way to structure this. Will have to run it by an attorney first of course.
YES, I AGREE YOU SHOULD GET AN ATTORNEY ON BOARD TO HELP YOU THRU THIS, BUT DO NOT LET THE ATTORNEY CHARGE YOU GOBS OF MONEY FOR THE LAND TRUST. YOU NOW KNOW HOW TO SET THESE UP YOURSELF.
My last question is this, so subject to deals need to be on a any special contract or just the standard contract for your state and do they have to contain any special wording. Thanks
THIS TOO IS A SUBJECT TO DISCUSS WITH A KNOWLEDGEABLE ATTORNEY. EACH STATE IS DIFFERENT AND YOU CAN GET IN A MESS OF TROUBLE IF YOU DO NOT DO THIS RIGHT!
Randy Hughes
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