Today I got this email from Teresa, a real estate broker:
James,
I have a buyer with a good down payment. They make good money, but they are self-employed, have less than perfect credit, and are having problems getting financing.
They have been looking to buy a home around the $300-400k range. I would like to get you connected up with my buyer to see if they can use your creative financing techniques to make a purchase.
Let me know when you are available.
Sincerely, Teresa, Real Estate Broker
***
Dear Teresa,
I can probably help this buyer. I look forward to talking with you. It sounds like you have found the kind of buyer who can benefit from creative financing.
What is the advantage to a buyer to do seller-financing? The buyer can avoid the cost and trouble of getting bank financing.
What is the advantage to a seller to do seller-financing? The seller will have more potential buyers and can probably get a better price than if the seller insisted on the buyer getting a new loan.
As an agent, what you are looking for is a buyer who can pay at least 8.0% to 10.0% percent down. You need that much to cover closing costs and commissions and other costs. Commissions usually get paid at closing. If part of the commission is to be paid when the buyer cashes out the seller, the commission owing should be secured by a mortgage from the seller.
You are looking for a seller who has a property with equity in it. It should be obvious that seller financing is not going to work in a short sale situation. The seller should have at least 10.0% equity in the property in order to cover closing costs and have some net from the sale.
If the seller has only 10.0% equity in the property, the seller’s equity will generally be cashed out. Then the buyer’s monthly payment will equal the seller’s mortgage payment.
If the seller has more than 10.0% equity in the property, either the buyer will make a larger down payment or the buyer will owe the seller his equity on a wrap around note and deed of trust.
These seller-financed deals are all unique. They are structured in different ways. I believe I can put them together so that buyer and seller are secure and so the lender will not object to the transaction. I would describe exactly how I handle these deals, but the information is “proprietary”.
When I put these deals together I usually represent buyer or seller – not both. If I represent one of the other, I make sure that I advise the party I am not representing to get legal counsel.
I can also serve as a neutral mediator and escrow closer, in which case I prepare proposed documents, which the buyer and seller have reviewed by their attorneys. I can often quote a flat fee payable at closing. I spend time talking with the brokers involved or the parties to determine if I can help them.
Bear in mind that seller-financing is not for everybody. Some sellers want or need to be cashed out. But some would like to have a secured note that pays 6.0% per year or higher. That beats a savings account.
I just closed a deal like this in Pierce County. The buyer is a contractor who is going to live in the house and run his business out of it. He has bought and sold a lot of properties. Property values were down, and and it was the time for those wanting a bargain price to be buying.
I believe that in many cases seller-financed transactions can be closed even when there is a due-on-sale clause in the seller’s mortgage. However, selling around a due-on-sale is not appropriate for a first time buyer unless they have consulted with their own real estate attorney.
Seller financing is great for builders because they can enjoy the seller’s low interest rate until they resell, and they will not have to pay huge points to hard money lenders.
If you are a buyer, seller, or broker, don’t be shy about calling. I do not charge for telephone inquiries.
Forward this to a friend. Subscribe by clicking on this link:
http://washingtonattorneybroker.com/subscribe/
James Robert Deal, Broker and Attorney
KW Everett
WSBA # 8103, DOL # 39666 NMLS # 64871
425-774-6611, 888-999-2022
James at James Deal dot com
40 Million McMansions
America has 40 million McMansions that no one wants By Christopher Mims 9 Feb 2012 11:12 AM Americans, especially generations X and Y, want...
Second Mortgage Time Bomb
Chapter 13 Bankruptcy Time Bomb: Mortgage Modification by Eugene S. Melchionne, Connecticut Bankruptcy Lawyer One of the major benefits of Chapter...
Ocwen Backs Principal Reductions
Ocwen Backs Principal Reductions, Mandatory Outsourcing to Improve HAMP By: Carrie Bay 03/03/2010 Ocwen Financial Corporation has one of the...
Farmer – Fisher Chapter 12 Bankruptcy
Chapter 12 Bankruptcy 2inShare by Douglas Jacobs, California Bankruptcy Attorney A largely forgotten form of Consumer bankruptcy is Chapter 12. ...
Mortgage Settlement Reached: A Beginning, Not an End
Mortgage Settlement Reached: A Beginning, Not an End George Zornick on February 9, 2012 - 11:05am ET It’s finally here: a massive settlement, worth...
Forgery in Missouri Foreclosures
Company Faces Forgery Charges in Missouri Foreclosures By GRETCHEN MORGENSON Published: February 6, 2012 One of the largest companies that provided...
An Easier Path to Refinancing
February 4, 2012 An Easier Path to Refinancing It is only a first step toward healing the economy’s biggest open wound, but President Obama’s new...
Bankruptcy: What Are You Waiting For?
Bankruptcy: What Are You Waiting For? by Dana Wilkinson, Attorney at Law Happy Groundhog Day! Lately the same refrain keeps cropping up in my...
Facing Foreclosure? You May Have Options
Facing Foreclosure? You May Have Options If yours is one of the nation’s estimated 14 million troubled mortgages, it can seem as though you...
Top 15 Lies About Bankruptcy
Top 15 Lies About Bankruptcy by Brett Weiss, Maryland Bankruptcy Attorney Bankruptcy is an area of the law that people avoid. They don’t want to...
Freddie Mac Screws Up Again
January 30, 2012 Treasury Investigates Freddie Mac Investment By SHAILA DEWAN The Treasury Department is investigating a report that Freddie Mac,...
Bankruptcy & Taxes
What Can I Do When Bankruptcy Doesn’t Get Rid Of The Tax? by Kent Anderson, Oregon Bankruptcy Attorney Bankruptcy can stop collection and eliminate...
Why Your Servicer Does Not Want To Modify Your Loan
No Modification for You! by Chip Parker, Jacksonville Bankruptcy Attorney For the last few years, I have witnessed a steady stream of homeowners...
Independent Foreclosure Review
Background The Federal Reserve Board issued enforcement actions against four large mortgage servicers --GMAC Mortgage, HSBC Finance Corporation,...
Swindlers, Liars, and Frauds
Problems Continue with HAMP
HAMP Not Working As Planned Recent figures show that only a small fraction of homeowners are seeing any kind of permanent relief under the federal...
Attorney Shawn Newman on Foreclosure Defense
Mortgage wizard interviews Attorney Shawn Newman on foreclosure defense.
Freddie & Fannie’s Mortgage Shell Game
Welcome to Freddie and Fannie’s Mortgage Shell Game By Shawn Timothy Newman, J.D. Adjunct Professor Saint Martin’s University In common parlance, a...
Home prices down 11% in King County
Prices dive as "distressed" home sales rise in King County The median price of houses sold in King County last month was $321,700, nearly 11 percent...
Banker Admits Making Bad Loans
November 30, 2011 A Banker Speaks, With Regret By NICHOLAS D. KRISTOF If you want to understand why the Occupy movement has found such traction, it...
Romney on Foreclosures – Bring Them On
November 26, 2011 - New York Times Mr. Romney on Foreclosures Since the housing bubble began to burst six years ago, prices nationwide have...
Declining Suburban Property Values
DRIVE through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty...
JR, am I going to lose my house?
11-21-11 From NG: Dear James, My daughter was here this evening and we were discussing how our loan modification is going right now, explained to...
Separate Investment Banking from Insured Depository Banking
Dodd-Frank did not correct the problem. Banks which enjoy deposit insurance are still free to gamble with securities. A proposed bill: 112TH...
Obama Admin Wants To Let Banks Off Easy
The banks want California, and the Obama administration hopes they can get it. In September, the attorney general of California, Kamala Harris,...
Attorney Tom Cox – Audio On Robo Signing
Disturbing News from Behind Closed Doors – Attorney Thomas Cox, A Mandelman Matters Podcast WARNING: THIS IS GOING TO BE DISTURBING… Thomas Cox is a...
Talcott Franklin Knows Mortgage Law
Attorney Talcott Franklin knows mortgage-backed securities inside and out. He should… his firm, Talcott Franklin P.C.whose main offices are in...
Successful Mod with Midland
Donna bought her home in 2006. She owed $296,000 on her first mortgage and $71,000 on her second. She bought the home zero down. Her first mortgage...
Hard to hire an attorney in California for modification help
See what Martin Andelman has to say about how hard it is to hire an attorney for modification help in California. This is a tricky business....
You Get What You Pay For
Virtually all of my modification clients tried it on their own and were turned down. Servicers will turn a borrower down and not tell them why....
No Friend to the Banksters… Attorney Nick Wooten
If I have to introduce Alabama foreclosure defense attorney Nick Wooten to you, then you’re not much of a foreclosure crisis news junkie, because...
The Bailout Should Have Helped Homeowners
TWO and a half years ago, Congress passed the legislation that bailed out the country’s banks. The government has declared its mission accomplished,...
Banks Save Billions Through Modification Shortcuts
NEW YORK -- The nation's five largest mortgage firms have saved more than $20 billion since the housing crisis began in 2007 by taking shortcuts in...
How does creative financing work?
March 27, 2011 Today I got this email from Teresa, a real estate broker: James, I have a buyer with a good down payment. They make good money, but...
Subscribe
Subscribe to get information weekly regarding the latest information in real estate.
Creative Financing Is Seller Financing
SELLER FINANCING IS A FORM OF CREATIVE FINANCING I would like to say a few words about creative financing, also referred to as seller-financing, or...
Bank of America Sued Over Trial Modification Plans
Anthony and April Soper's financial troubles were only starting last October when they applied for a mortgage adjustment through the Obama...
Federal Judge Rules Borrowers Can Enforce Modification
In the past it was argued that borrowers lacked standing to complain if servicers and lenders failed to modify loans because they were not parties...
Wrap-Around And Lease-Option Transactions
Wrap-around deed of trust and lease-option transactions are back. Buyers are having trouble getting financing. This reduces the number of sales....
Judgment Proof?
Are you Judgment Proof? Surprisingly, the best approach for some people who are deeply in debt is to take no action at all. If you're living simply...
Modification Guidelines
Read the Hamp Handbook here. It will answer a lot of questions. Lenders may but are not required to reduce principal balances in a modification down...
It is Getting Harder To Modify
Lenders are starting to require income verification before putting borrowers into trial payments. Lenders are tightening modification requirements...
FTC tries to prevent you from hiring an attorney to assist with modification
On the mortgage modification front: Martin Andelman writes regularly regarding mortgage modification. This is latest article: The secret NPV...
FTC Wants To Prohibit Up-Front Fees
The Federal Trade Commission is up to no good. The FTC proposes to enact a regulation which will prohibit third-party modification providers,...
Allow Judges to Cram Down Mortgage Balances
Quoting from Martin Andelman: In the next 2-3 years, it is estimated that there will be an additional 14 million foreclosures in this country. That...
Final Modification Obtained
Philip got behind on his mortgage because his employer cut his hours. He and his wife work for the same nursery and earn only minimum wage. Philip's...
Foreclosures Are More Profitable Than Modifications
Mortgage companies are more likely to foreclose on homeowners than modify their loans because they make more money off foreclosures, argues a new...
Geitner Require Lenders to Make Progress on Modifications
Tim Geitnner has written the attached letter to the 25 servicers who are participating in HAMP - Home Afffordable Mortgage Program - such as...
To My Mortgage Modification Clients
These are general instruction as to what you can do to make your modification a success. Please report to me by e-mail and/or fax any communications...
Right To Attorney Representation – Mortgage Company Interference
The Obama administration and the banks are badmouthing "third-party modification companies."The banks will do everything they can to convince you...
Home
Click here for links to articles about mortgage modification.
Click here to read about my back ground as an attorney. (link toabout me under jamesrobertdeal.com/aboutme
Click here to read about my background as a mortgage broker. (link to about me under dealmortgage.net/aboutme)
Click here to read about my pro bono work as an environmental attorney working against water fluoridation. (link to fluoride)
More about mortgage modification:
Who qualifies for mortgage modification? (link to More Information About Mortgage Modification)
Factors Which Affect the Mortgage Modification Outcome
What We Shoot For in Mortgage Modification
Some Examples of Modifiable Loans
Can You Handle Your Own Mortgage Modification?
Attorney-Based Mortgage Modification vs. Non-Attorney-Based Modification
When Should You File For Bankruptcy?
Modification of Credit Card Debt
Our Office Policies
Water fluoridation is an unhealth practice which has gone on for too long. (link to fluoride)
We should do comrehensive transportation planning. We should make a master plan for 2050. We should start building pieces of it right now. Everything we build should fit in as a piece of that plan. (link to http://comprehensive-transportation.blogspot.com/
