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HLS
ParticipantSURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)
The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.
The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.
That being said, as long as payments are being made, I’d be surprised if loans were actually called today.
The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.
There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.
At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.
There are people willing to “sell” this way.
ParticipantSURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)
The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.
The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.
That being said, as long as payments are being made, I’d be surprised if loans were actually called today.
The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.
There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.
At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.
There are people willing to “sell” this way.
ParticipantSURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)
The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.
The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.
That being said, as long as payments are being made, I’d be surprised if loans were actually called today.
The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.
There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.
At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.
There are people willing to “sell” this way.
ParticipantA number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.
If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.
In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.
And of course there are those that are holding and not listing on because………”they don’t want to lose money”
The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.
Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.
Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.
Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.
My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.
The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.ParticipantA number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.
If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.
In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.
And of course there are those that are holding and not listing on because………”they don’t want to lose money”
The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.
Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.
Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.
Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.
My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.
The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.ParticipantA number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.
If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.
In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.
And of course there are those that are holding and not listing on because………”they don’t want to lose money”
The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.
Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.
Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.
Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.
My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.
The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.ParticipantThanks Temec,,
I’m still out here, actually been very busy.
A GOOD FAITH ESTIMATE (GFE) is really just an estimate that can be totally inaccurate, without any consequences.
In tiny print, it states that it’s only an estimate, and that fees can change. They are useful for lying from those that choose to, not really good for shopping.Since rates change every day, until you want to lock, the quoted rate means nothing, until it is locked AND you are approved. It’s really frustrating for the consumer.
A HUD statement from escrow is MUCH more accurate, but you usually don’t see one until signing.
If shopping with a broker, just tell them to cut through the crap and ask them how much they need to make on your loan.
They are only in control of their fees and the rate that they offer you.Title, escrow, and lender underwriting are out of their control. You can often choose the first two yourself if you wish.
Ask them if they will give you the PAR wholesale rate, so they don’t get any commission from the lender on the back end for overcharging you. It’s also known as YSP.
Also get buy down options. It is IMPOSSIBLE for them to get a commission if you pay discount points and buy down the rate.
If you want a “no cost loan” ask them to explain the fees and true costs to you,(and see if they even can) so you will know which is a better loan for you.
You will never see this back end commission until the day that you are signing docs, and if you don’t know where to look, you won’t even know it.
Contrary to what many think, The industry is highly regulated and everything must be disclosed.
A mortgage broker et al doesn’t (legally) get a penny back from Title, Escrow, or Appraiser, …and if they are getting anything from the lender it MUST be disclosed, but only in one spot on one line on your closing statement.
If it is a direct lender, who is lending their own money,
(BANKS, etc) the rules are completely different. They WILL NOT and DO NOT have to disclose if you were overcharged. They may tell you that they don’t have any fees, but it’s just built into the rate.If you find someone that you can trust, it’s not a game. You may find out that calling around will just lead you to getting teaser rates, misquoted, and misled.
Nobody will do it for you for free, you will pay one way or another. Getting you into the best loan that you qualify for and can be approved for is what you will be paying for.
It might be a bank, it might be a broker, etc.
No simple answer.ParticipantThanks Temec,,
I’m still out here, actually been very busy.
A GOOD FAITH ESTIMATE (GFE) is really just an estimate that can be totally inaccurate, without any consequences.
In tiny print, it states that it’s only an estimate, and that fees can change. They are useful for lying from those that choose to, not really good for shopping.Since rates change every day, until you want to lock, the quoted rate means nothing, until it is locked AND you are approved. It’s really frustrating for the consumer.
A HUD statement from escrow is MUCH more accurate, but you usually don’t see one until signing.
If shopping with a broker, just tell them to cut through the crap and ask them how much they need to make on your loan.
They are only in control of their fees and the rate that they offer you.Title, escrow, and lender underwriting are out of their control. You can often choose the first two yourself if you wish.
Ask them if they will give you the PAR wholesale rate, so they don’t get any commission from the lender on the back end for overcharging you. It’s also known as YSP.
Also get buy down options. It is IMPOSSIBLE for them to get a commission if you pay discount points and buy down the rate.
If you want a “no cost loan” ask them to explain the fees and true costs to you,(and see if they even can) so you will know which is a better loan for you.
You will never see this back end commission until the day that you are signing docs, and if you don’t know where to look, you won’t even know it.
Contrary to what many think, The industry is highly regulated and everything must be disclosed.
A mortgage broker et al doesn’t (legally) get a penny back from Title, Escrow, or Appraiser, …and if they are getting anything from the lender it MUST be disclosed, but only in one spot on one line on your closing statement.
If it is a direct lender, who is lending their own money,
(BANKS, etc) the rules are completely different. They WILL NOT and DO NOT have to disclose if you were overcharged. They may tell you that they don’t have any fees, but it’s just built into the rate.If you find someone that you can trust, it’s not a game. You may find out that calling around will just lead you to getting teaser rates, misquoted, and misled.
Nobody will do it for you for free, you will pay one way or another. Getting you into the best loan that you qualify for and can be approved for is what you will be paying for.
It might be a bank, it might be a broker, etc.
No simple answer.ParticipantThanks Temec,,
I’m still out here, actually been very busy.
A GOOD FAITH ESTIMATE (GFE) is really just an estimate that can be totally inaccurate, without any consequences.
In tiny print, it states that it’s only an estimate, and that fees can change. They are useful for lying from those that choose to, not really good for shopping.Since rates change every day, until you want to lock, the quoted rate means nothing, until it is locked AND you are approved. It’s really frustrating for the consumer.
A HUD statement from escrow is MUCH more accurate, but you usually don’t see one until signing.
If shopping with a broker, just tell them to cut through the crap and ask them how much they need to make on your loan.
They are only in control of their fees and the rate that they offer you.Title, escrow, and lender underwriting are out of their control. You can often choose the first two yourself if you wish.
Ask them if they will give you the PAR wholesale rate, so they don’t get any commission from the lender on the back end for overcharging you. It’s also known as YSP.
Also get buy down options. It is IMPOSSIBLE for them to get a commission if you pay discount points and buy down the rate.
If you want a “no cost loan” ask them to explain the fees and true costs to you,(and see if they even can) so you will know which is a better loan for you.
You will never see this back end commission until the day that you are signing docs, and if you don’t know where to look, you won’t even know it.
Contrary to what many think, The industry is highly regulated and everything must be disclosed.
A mortgage broker et al doesn’t (legally) get a penny back from Title, Escrow, or Appraiser, …and if they are getting anything from the lender it MUST be disclosed, but only in one spot on one line on your closing statement.
If it is a direct lender, who is lending their own money,
(BANKS, etc) the rules are completely different. They WILL NOT and DO NOT have to disclose if you were overcharged. They may tell you that they don’t have any fees, but it’s just built into the rate.If you find someone that you can trust, it’s not a game. You may find out that calling around will just lead you to getting teaser rates, misquoted, and misled.
Nobody will do it for you for free, you will pay one way or another. Getting you into the best loan that you qualify for and can be approved for is what you will be paying for.
It might be a bank, it might be a broker, etc.
No simple answer.ParticipantYou are soooo right.
This isn’t the 90’s… It’s 2007, and the housing mess this time is going to be 20 times worse than in the 90’s.The loss of homes in the 90’s was virtually all to people that had used down payments, and still lost.
There were probably 25 times the number of people that bought homes with no money down in the last 7 years.
Some of them got lucky, they got in early. It wasn’t brilliance. Pity the ones that bought after 2004.Forget the “subprime” borrower. There are plenty of prime borrowers with similar loans that will be adjusting also.
They cannot afford their new payments either.
With a loan balance of $600K and a home value of $400K or $500k, even some prime borrowers will walk away, adding to inventory.The only difference between a prime loan and subprime loan is the prepayment penalty. Plenty of people with high scores are in loans with prepays. Plenty of prime borrowers are in option arm loans, which are the worst loan ever invented for the borrower (and best loan ever for the lender)
Anybody who bought a home with an adjustable loan and without a down payment was just gambling. No different than going to a casino. You take your chances. Sometimes you win, and sometimes you lose.
Looking for someone to blame for your gambling loss is just wrong.
La Jolla is not a starter home community. The market there may hold up better than others, but it’s still going to weaken.
ParticipantYou are soooo right.
This isn’t the 90’s… It’s 2007, and the housing mess this time is going to be 20 times worse than in the 90’s.The loss of homes in the 90’s was virtually all to people that had used down payments, and still lost.
There were probably 25 times the number of people that bought homes with no money down in the last 7 years.
Some of them got lucky, they got in early. It wasn’t brilliance. Pity the ones that bought after 2004.Forget the “subprime” borrower. There are plenty of prime borrowers with similar loans that will be adjusting also.
They cannot afford their new payments either.
With a loan balance of $600K and a home value of $400K or $500k, even some prime borrowers will walk away, adding to inventory.The only difference between a prime loan and subprime loan is the prepayment penalty. Plenty of people with high scores are in loans with prepays. Plenty of prime borrowers are in option arm loans, which are the worst loan ever invented for the borrower (and best loan ever for the lender)
Anybody who bought a home with an adjustable loan and without a down payment was just gambling. No different than going to a casino. You take your chances. Sometimes you win, and sometimes you lose.
Looking for someone to blame for your gambling loss is just wrong.
La Jolla is not a starter home community. The market there may hold up better than others, but it’s still going to weaken.
ParticipantYou are soooo right.
This isn’t the 90’s… It’s 2007, and the housing mess this time is going to be 20 times worse than in the 90’s.The loss of homes in the 90’s was virtually all to people that had used down payments, and still lost.
There were probably 25 times the number of people that bought homes with no money down in the last 7 years.
Some of them got lucky, they got in early. It wasn’t brilliance. Pity the ones that bought after 2004.Forget the “subprime” borrower. There are plenty of prime borrowers with similar loans that will be adjusting also.
They cannot afford their new payments either.
With a loan balance of $600K and a home value of $400K or $500k, even some prime borrowers will walk away, adding to inventory.The only difference between a prime loan and subprime loan is the prepayment penalty. Plenty of people with high scores are in loans with prepays. Plenty of prime borrowers are in option arm loans, which are the worst loan ever invented for the borrower (and best loan ever for the lender)
Anybody who bought a home with an adjustable loan and without a down payment was just gambling. No different than going to a casino. You take your chances. Sometimes you win, and sometimes you lose.
Looking for someone to blame for your gambling loss is just wrong.
La Jolla is not a starter home community. The market there may hold up better than others, but it’s still going to weaken.
ParticipantThey may have financing lined up, meaning that they qualify as buyers, but the property will need to qualify as well. Appraisal will need to be reviewed and accepted by a lender.
A borrower qualifying and the property qualifying are different.
You can ask for a pre-approval letter from the buyer with your counter.
Never assume anything.
ParticipantThey may have financing lined up, meaning that they qualify as buyers, but the property will need to qualify as well. Appraisal will need to be reviewed and accepted by a lender.
A borrower qualifying and the property qualifying are different.
You can ask for a pre-approval letter from the buyer with your counter.
Never assume anything.
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