Unless for some reason your mortgage company has a reason to check the title, I doubt they would ever know. As far as calling the loan, probably want happen unless the payments aren’t sent in, in a timely manner.
Sounds like you have a decently sophisticated buyer. You could probably accomplish the same thing buy doing a performance mortgage. Don’t really know which way would be better.
Personally, I might look for another buyer, selling with Owner financing, you hsouldn’t have a problem, finding one on your terms.
I need some advice on this situation. I have sold a house to someone on an unrecorded Agreement of Sale. I don’t want to trigger the due on sale clause, and the buyer can’t qualify for a conventional mortgage at this time. She wants to record an Affidavit and Memorandum of Agreement Concerning Real Estate as a means of identifying her interest in the property. Will this be seen by my mortgage company? And will it cause them to call in my loan?
If this is an istitutional lender with perhaps (tens of) thousands of notes in its porfolio it’s hard to imagine they’ll find in necessary to check titles, even randomly.
In my experience only 1 out of 10-15 buyers will want their contractual rights to be recorded in some way. Money always talks to me. If they are putting a large down payment, I’d let them record it.
Ann:
I would advise NOT recording anything that might cause your lender to claim that the due on sale or transfer clause has been violated. If you have sufficient equity in the propertry perhaps AFTER the (AFD)agreement for Deed is seasoned for a short period of time a note buyer would cash you out on the AFD and then out of those proceeds you simply pay off the other lender. Remember you are trying to accomdate this buyer, certainly they want their interests protected as the buyer BUT you need to be careful.
Another tip might be to allow them to have an option or a memorandum of option that could be recorded.
Without knowing whether you financed long term or short term with them it is difficult to gauge you level of risk.
Michael Morrongiello
Operations Manager
American Note