This family is happy because they were able to buy a home without jumping over the hurdle of getting a new mortgage. They assumed the seller’s already existing loan. Or they gave the seller a wrap-around deed of trust, with the seller to continue to make the payments on his existing loan. Or they entered into an unrecorded lease-option agreement for the purchase of their new home.
Either way, they got into a property sooner than they would have been able to otherwise. Maybe their credit was a little too low. Maybe they had a recent bankruptcy. Maybe they had a recent short sale. Maybe they had recent late mortgage or rent payments.
It is tough to get by these days. Life is backward. When you are old, you usually have more than enough money. When you are young and have kids and need the money the most there is not enough.
Or maybe they could have gotten a new mortgage but chose not to do so. Mortgages involve a lot of closing costs. Maybe they were able to get a better rate or lower payment by buying using seller financing.
Creative financing is usually synonymous with seller financing, although creative financing is a broader term.
Seller financing has been around for a very long time. Read about the recent history of creative financing or seller financing here.
Seller-financing is advantageous because it avoids the hassle of having the buyer get a new loan. There are only two parties to a seller-financed deal, buyer and seller, instead of the usual three parties. The lender is not there to rain on the parade. Two is company and three is a crowd – in love and in real estate transactions.
Are you are a seller having trouble selling your property? I can guarantee you that a big part of the problem is that buyers in general are having a hard time getting financing. This is reducing your number of potential buyers. Or maybe your property needs work and does not appraise for enough? If so, then why not eliminate the obstacle? Why not sell utilizing a lease-option or a wrap-around deed of trust or an assumption – with or without lender approval? I am good at getting lender approval. Why make the buyer go get a new loan? Let the buyer use your loan.
In the old days almost all residential bank loans could be assumed or “wrapped around” or “taken subject to”. Then in 1986 Congress passed the Garn St. Germain Act. The due-on-sale clause in paragraph 17 or 18 of your deed of trust became enforceable under federal law. Before 1986 many states, including Washington and California, regarded due on sale clauses as “impediments to sale” or “restraints on alienation” and therefore void, at least as to residential properties.
Most real estate brokers are afraid to “go around” a due-on-sale clause. Most brokers tell buyers they have to get financing so the seller can pay off his or her loan. However, seller financing can work, although it has to be done carefully and with full disclosure to all parties. It helps if your broker is also an attorney.
I think one way out of our real estate recession would be for the enforceability of due-on-sale clauses to be suspended or greatly relaxed. Seventy percent of mortgages are owned by Fannie and Freddie, and they could suspend enforcement of Paragraph 18 of the standard deed of trust with the stroke of a pen. I wrote to the president about this. I wrote to the president of Fannie, the president of Freddie, the secretary of the treasury, the head of the FED. So far only Ben Bernanke responded. He like the idea but said it was outside his jurisdiction.
In a seller-financed deal the buyer makes monthly payments to a collection service. The collection service pays the lender in the seller’s name and keep a record of everything. The collection service might hold an executed deed or a full reconveyance. The buyer will pay a reasonable down payment, sometimes even enough to pay for closing costs and commissions and maybe enough to cash out the seller’s equity in the property.
If you are a frustrated buyer, especially one having trouble getting financing, look for a seller who will carry the balance. You might find one on your own, and if you do, contact me and I will write up the deal and get it into escrow.
On the other hand, you are more likely to find a willing seller if you work through a broker. Tell your broker to look for a seller who will carry the balance. When your broker finds a willing seller, tell your agent to call me. I will help him “land the airplane”.
Bear in mind that VA and FHA loans are assumable, provided that the buyer proves credit worthiness by customary credit standards, which may be less strict than standards for new loans. A possible reason for the reduced strictness is that the seller is not released from liability, which means the lender will have two parties “by the hind leg” and liable to pay the mortgage.
If you are a broker working on a deal, don’t be shy about calling. I spend a lot of time on the phone with brokers at no charge discussing these deals. After an initial discussion, I can often quote a flat fee. I love to work with brokers. They butter my bread. Sometimes I take all or part of my fee at closing.
By the way, I put on seller-financing seminars at real estate offices.
I sometimes take part of my fee when I am hired and part at closing. Clients like that.
Creative financing, seller-financing, wrap-around mortgages, lease-option deals – they work for residential property, second homes, rental houses, commercial property, building lots – you name it.
When a buyer and a seller find each other and want to buy and sell using creative financing, buyer or seller or broker should bring in a real estate lawyer to write up the deal and see that it gets closed properly and safely and to make sure that everyone gets full disclosure. These creative financing deals are complicated and it takes technical expertise to write them up. I have lost count of how many deals I have written or reviewed since I started doing real estate deals in 1978.
The selling broker and buyer broker normally write up deals for no extra charge. Brokers are authorized to write purchase agreement if standard forms will cover all the issues. But with seller-financing, there are no standard forms. Each deal is different. A lot of issues have to be addressed. Brokers have earned their commission when they bring buyer and seller to the point where they have reached a basic oral agreement. It is not the Broker’s duty to write up a complex deal. It is my job to add the technical details, identify all the issues and address them, and get the deed, note, deed of trust, lease-option agreement, collection account agreement, and other documents drafted. All the escrow closer has to do then is sign up the parties and handle the money.
There are several ways I can be involved. The buyer or seller can hire me and pay me a fee to draft creative financing documents. Or I can work as co-listing or co-selling broker. I can do that because I am also a licensed real estate broker. This may not necessarily cost the broker anything. The seller might agree to raise the commission enough to cover my fee, and I can take all or part of my fee at closing, which makes things more convenient for everyone. No one likes to pay attorneys by the hour, nor do I enjoy keeping track of my time by the hour and sending out bills.
Whether I work as listing or selling broker or as listing co-broker or selling co-broker, I am representing my client both as attorney and real estate broker. The party which hires me is getting a real estate co-broker and a real estate lawyer for one fee.
My role is to craft a transaction that will close and which will keep everyone out of legal hot water. My role is to prepare all documents for the escrow agent and see to it that the transaction gets closed. When there is another attorney involved, it is my role to work with that attorney to find a workable strategy and explain to him or her why I believe a creative financing transaction would be reasonable and safe. I make sure that the other party gets legal counsel if necessary.
I am only licensed to practice in Washington. If your property is in another state, and if you still want to hire me, you would also need to hire co-counsel in your state who will “sponsor” me.
James Robert Deal, Broker and Attorney
Broker with Agency One Realty LLC
WSBA # 8103, DOL # 39666
James at James Deal dot com
- 1 Bothell Real Estate Attorney
- 2 Real Estate Attorney And Real Estate Broker
- 3 Author
- 4 Buyers With a Good Down Payment But Poor Credit
- 5 Seeking Lease Option and Contract Sellers
- 6 Let Freedom Ring – Song
- 7 Underwater Properties – Short Sales – Modification
- 8 Condo Dues – Short Sale Then Bankruptcy
- 9 Open Telephone Line
- 10 Blacks Against Mandatory Vaccination
- 11 $5,000 Principal Reduction
- 12 Services We Offer
- 13 Door-To-Door Transit
- 14 Seller Financing – The Original Financing
- 15 I Help Brokers Do Seller Financed Deals
- 16 Lease-Option Deals Open Doors
- 17 Servicers Make More Money By Modifying Than By Foreclosing
- 18 Zombie Foreclosures
- 19 New Federal Rules on Foreclosure
- 20 Washington MERS Suits Fail
- 21 Modification on Rental
- 22 Making Home Affordable Continues
- 23 Rental Property Modification
- 24 $157,105 Wells Fargo Principal Reduction
- 25 Wells Fargo – 3 Year Modification
- 26 Principal Reduction Modification
- 27 Deceptive Practices in Foreclosures
- 28 Low Modification Approval Rate
- 29 Renters’ Rights in Foreclosure`
- 30 Eminent Domain To Modify Loans
- 31 Fannie and Freddie Loosen Modification Guidelines
- 32 Lenders Lie to Modification Applicants
- 33 Bank of America – Fannie Modification
- 34 Banks Forgive Mostly Worthless Seconds
- 35 More Foreclosures Coming
- 36 Zombie Titles
- 37 Consumer Financial Protection Bureau Guidelines
- 38 Aurora, Bank of America, Citibank, Chase, MetLife, PNC, Sovereign, SunTrust, U.S. Bank, Wells Fargo –
- 39 Calibur – Formerly Vericrest
- 40 Debt Forgiviness Will Be Imputed Income Unless Congress Acts
- 41 Obama to Replace DeMarco – Stingy Leader of Fannie and Freddie
- 42 California Puts Attorneys Out of the Modification Practice
- 43 Stratigic Default
- 44 Jumbo Modification
- 45 What Caused the 2007 Crash
- 46 Strategic Defaulters – To Jail With You
- 47 Still No Justice for Mortgage Abuses
- 48 Modifying Loans on Rental and Commercial Property
- 49 Successful Citi Modification
- 50 Midland Mortgage Modification
I am a real estate attorney serving Bothell, Washington. Contact me at 425-771-1110 or 888-999-2022.
James Robert Deal is both a real estate agent and a real estate attorney practicing in Lynnwood Washington. If He is your broker, he does not charge extra for legal work related to your transaction.
What To Serve A Goddess When She Comes For Dinner Welcome To My Book I highly recommend it. I had a lot of fun writing it. My book has 464 page book. It is 8.5″ x 11″ in size. It weighs three pounds. It is a beautiful book. It comes autographed. I can autograph it...
If you are a would-be buyer who has a good down payment and good income but poor credit, I am willing to help you buy property on a lease-option or contract basis. James Robert Deal, attorney and broker. 425-771-1110
Seeking Lease-Option and Seller Contract Sellers Open Phone Line to Brokers, Buyers, Sellers 425-774-6611 - 888-999-2022 I am working with several buyers who have strong income and good down payments but who have bad credit and cannot get financing. These buyers...
Let Freedom Ring – a song by vaccine rights attorney Allan Phillips.
James Robert Deal, real estate attorney and real estate agent, handles mortgage modifications and short sales.
Deal with unpaid condo dues by short selling the condo and going through Chapter 7 bankruptcy.
James Robert Deal, Attorney and Broker, in Lynnwood Washington
African-American community rages against manditory vaccination in California and the Tuskegee-like crimes of mandatory vaccines that destroy black babies' lives http://www.naturalnews.com/050038_SB277_vaccine_mandate_Tuskegee_medical_experiments_African-Americans.html...
Republicans want to put an end to HAMP and Making Home Affordable.
We have an open telephone line to brokers, buyers, sellers, and clients in general who may need help with buying or selling real estate or who may need help with mortgage modification. Services we offer: Help to Brokers, Co-Brokering Escrow Setup Lease Option Deals...
Door-To-Door Transit: The Only Solution To Our Traffic Nightmare by James Robert Deal, Attorney Traffic is bad and getting worse, and there is no solution in sight, as one would conclude from reading Eli Sanders’ “Welcome to Town, Here’s Why You’re Stuck in Traffic”...
AN ABBREVIATED HISTORY OF CREATIVE FINANCING The first forms of financing was seller financing. The buyer would buy personal property or real property and pay the seller on an installment basis. Over time lending houses grew up, and purchase mortgages developed....
Attorney James Robert Deal helps brokers structure seller financed real estate transactions.
LEASE-OPTION AND LEASE PURCHASE DEALS A lease-option or lease-purchase deal is a form of seller financing. With the lease-option deal, title stays in the seller until the buyer refinances or resells or otherwise pays off the seller. The wrap-around deed of trust deal...
Thanks to Martin Andleman and Mandleman Matters Why Does Ocwen Want to Modify Loans? Answer: Because they profit by doing so. In case you haven’t noticed, over the last month or so there’s been an ongoing debate of sorts happening on Mandelman Matters as to...
CFPB: Zombie foreclosures hurt borrowers The Consumer Financial Protection Bureau is keeping an eye on “zombie” foreclosures, which it worries cause “direct borrower harm,” according to a CFPB executive. Zombie foreclosures occur when a bank starts the foreclosure...
New Federal Rules on Foreclosure —By Erika Eichelberger - Thanks to Mother Jones On Thursday, the Consumer Financial Protection Bureau, the federal consumer watchdog set up by the Dodd-Frank financial reform bill, announced a new set of foreclosure-prevention...
Judges Dismiss MERS Suits By Evan Nemeroff Two borrower-initiated lawsuits alleging that the Mortgage Electronic Registration Systems role in the plaintiffs' deeds of trust caused them injury were both dismissed by federal judges in the Western District of Washington...
It is harder to get a mortgage modification on a rental property than it is on an owner occupied property. The rules are not as clear. You need a higher income to qualify for a rental modification because you have to be able to cover your home mortgage. Nevertheless,...
HAMP continues aiding borrowers Three firms still fall short in meeting servicing goals. Thanks to Housing Wire. Kerri Ann Panchuk December 9, 2013 4:48PM Bank of AmericaCitiTreasuryHome Affordable Modification ProgramHAMPhomeownersObama AdministrationHousing...
This is a rental property modification. Ocwen was the servicer, and the investor was Washington Mutual and now Chase. The owner quit paying for 20 months, and the balance rose to $254,000. The interest rate was already under 3.0%, because this was an adjustable rate...
JS is a hard working taxi driver. He came to us after a financial hardship, including a divorce. Ocwen is his servicer, however, the important fact is that Wells Fargo is the investor, the owner of his mortgage. Wells Fargo gives principal reductions because it was...
It is a long story, which I will tell later. For now I will just share the link with you and tell you that this modification took three years to complete. Here is the link:...
We just negotiated this excellent modification with Bank of America. The interest rate was reduced to 2.0%. The principal balance was reduced by $131,000.
Deceptive Practices in Foreclosures Thanks to the New York Times September 13, 2013 In early 2012 when five big banks settled with state and federal officials over widespread foreclosure abuses, flagrant violations — including the seizure of homes without due process...
This post comes from Martin Andelman. The low approval rate on modifications Martin discusses is the main reason why you should hire an attorney to do your modification. Our success rate on modifications is much higher, around 80%. Of course, part of the reason why...
Renters in Foreclosure: What Are Their Rights? Federal law gives important rights to tenants whose landlords have lost their properties through foreclosure. Renters and tenants are now being affected by foreclosures almost as often as homeowners. The financial...
A City Invokes Seizure Laws to Save Homes Peter DaSilva for The New York Times Thanks to New York Times. Robert and Patricia Castillo paid $420,000 for a three-bedroom, one-bathroom home in Richmond, Calif., in 2005. It is now worth $125,000. By SHAILA DEWAN...
FHFA expands suite of loan mod tools By Kerri Ann Panchuk • March 27, 2013 • 9:00am Servicers dealing with loans guaranteed or owned by Fannie Mae and Freddie Mac will soon be required to offer eligible distressed borrowers ways to lower their monthly payments if the...
We have found that Lenders often take advantage of those who apply for modification on their own. Lenders tell them they have not received certain documents and say their documents have "expired". Often lenders decline modification and do not make the reason clear....
HMH came to me following a financial hardship. He faced high payments on his Bank of America serviced loan, with a rate of 5.625. The investor is Fannie Mae. HMH is self-employed as a taxi driver. He also owns a rental house in Brooklyn, which breaks even or makes a...
The Second-Mortgage Shell Game By ELIZABETH M. LYNCH Thanks to the New York Times IN January, federal regulators announced an $8.5 billion agreement with 10 mortgage servicers to settle claims of foreclosure abuses, including bungled loan modifications and the...
Where is the housing market going in 2013? Thanks to CBS News (MoneyWatch) The housing market in 2013 stands on a precipice. While there is hope that the slow, but real, housing recovery that took hold last year will continue, fear remains that a sudden...
The latest foreclosure horror: the zombie title By Michelle Conlin Thanks to Reuters. COLUMBUS, Ohio | Thu Jan 10, 2013 1:58pm EST (Reuters) - Joseph Keller doesn't expect he'll live to see the end of 2013. He blames the house at 190 Avondale Avenue. Five years ago,...
U.S. Consumer Watchdog to Issue Mortgage Rules By EDWARD WYATT Thanks to New York Times Published: January 10, 2013 WASHINGTON — Banks and other lenders will be prohibited from making home loans that offer deceptive teaser rates or require no documentation from...
Aurora, Bank of America, Citibank, Chase, MetLife, PNC, Sovereign, SunTrust, U.S. Bank, Wells Fargo –
Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance WASHINGTON--Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have...
Mortgage modification is the practice of law. Dealing with Caliber Home loans is not easy. Get legal representation.
Beware of IRS Tax Whammy With Short Sales and Mortgage Modifications in 2013 Posted on Wednesday (December 26, 2012) at 6:00 pm to Mortgages & Sub-Prime Mortgage Meltdown Thanks to Long Island Bankruptcy Blog Written by Craig D. Robins, Esq. When a mortgage...
BYE-BYE DEMARCO! Obama to Replace Director of FHFA 3 You know, I was having kind of a crummy day… nothing serious, just dragging my feet a bit and grinding through some writing I’ve been working on for too long… and thinking about how nothing is changing… and then out...
California State Bar RECENT Decision to Cause More Harm to Homeowners in Foreclosure Thanks to Martin Andelman It’s hard to imagine anything gone so totally wrong as the California State Bar’s interpretation and subsequent handling of SB 94, a law passed in...
Giving Up and Getting Out Foreclosures are no longer a last resort, and a growing percentage of americans think it’s ok to strategically default LISA IANNUCCI Years ago, homeowners viewed foreclosure as a last resort – after all other means had been exhausted to save...
A residential property where the first loan was more than around $729,000 at the time of the default is not eligible for modification under the Making Home Affordable program. However, home owners with jumbo-size loans should not despair - especially if their home is...
The Trillion Dollar Mistake That Triggered the Economic Meltdown Thanks to Martin Andelman It was summer, 2006, and Fed Chair Alan Greenspan had just raised interest rates for the 17th consecutive time in an effort to cool off the over-heated U.S. housing market....
FHFA Looking to Jail Strategic Defaulters by my friend Martin Andelman The Federal Housing Finance Administration (“FHFA”), which is the agency created to oversee Fannie Mae and Freddie Mac… the one run by perhaps the least popular man in America for his...
Still No Justice for Mortgage Abuses September 1, 2012 Thanks to New York Times It has been six months since the big banks settled with state and federal officials over evidence of widespread foreclosure fraud, promising to provide $25 billion in mortgage relief in...
Under HAMP Tier 2, the Making Home Affordable program was extended to cover one to four unit residential rental properties. HAMP Tier 2 went into effect June 1, 2012. The government realized that foreclosing on a rental property was just as destructive of home values...
On this modification with Citi there was no principal reduction because the property was not underwater. However, the interest rate was reduced from 6.375% to 2.0% for five years, 3.0% for one year, and then 3.875% for the next 35 years. Read the details here:...
We negotiated a good deal for Dennis and his wife. They went from a 9.5% rate to 2.0% for five years, then 3.0% for a year, and 3.875% for the balance of the loan. They also got a $24,000 principal reduction. Read the details here:...