Posted by CarolFL on April 07, 2000 at 11:50:20:
Thanks - it was great. I forwarded the page on to the parties involved.
Carol
Can anyone direct me to “forgiven seconds” threads? - Posted by CarolFL
Posted by CarolFL on April 07, 2000 at 08:05:02:
I am not terribly efficient at the search function and want to reread some of it.
Same old deal - contract at $110,000 for a house appraised at $125,000. Lender first agrees to a 90% loan, then decides (because of some of the features of the house - not the borrowers) they will only do 80%.
Parties had agreed originally to 90% (of $110,000) first, $5000 cash from buyers, seller to pay $5000 in closing costs and carry a 2nd for the balance.
Now the mortgage broker is saying to resubmit the contract at $125,000 with a 15% seller-held, soon-to-be-forgiven 2nd, 5% cash from buyer and 80% loan. His contention is that “it’s OK with the lender”.
I know we’ve been all thru this before, but I am looking for references for the RE broker involved who wants to be able to lay it all out to the seller and buyer… including any tax consequences should someone decide to do this ANYWAY!
Thanks for the references.
Carol
Use Notes to discount instead of throwing away seconds… - Posted by Mark-NC
Posted by Mark-NC on April 07, 2000 at 15:31:20:
Carol,
This may be a viable option to throwing away seconds. It punishes the buyer instead of the seller taking a hit and putting themselfs at risk for fraud and a tax hit.
Example, Say you have a buyer that would Qualify for a 85% LTV from a Note Buyer and they only have 10% down. In this case you would have to hold a 5% second. What you do instead is write the Note for 90% LTV, with out holding a second. Then what happens is the Note buyer is going to discount you all the way down to 85% plus the regular discount. So you end up taking A discount on the sale of the Note instead of throwing away a second. Granted Your buyer is gong to have a higher mortgage but it takes the risk and tax hit away from you.
Mark
Ok, try this instead. - Posted by John Behle
Posted by John Behle on April 07, 2000 at 10:50:36:
The links and articles I mentioned are not under “recommended sites” - it’s under the “paper posts” section.
Real Simple - Posted by John Behle
Posted by John Behle on April 07, 2000 at 10:46:51:
The mortgage broker is not the lender and can’t make their decision or necessarily speak for them. He/she should represent the interests of the lender - but that is an ideal world.
You can do almost anything you want if the lender is agreeable. But, jumping through a bunch of deceptive hoops and steps is usually a sure sign that the lender doesn’t know or agree.
I’ve looked for some authoritative articles, legal precedents, etc. related specifically to the “Forgivable Seconds” and have yet to find anything that specifically address that particular form of deception.
So I don’t have to keep expressing my opinion about the subject and getting branded as the resident “Loan cop” here I posted some of the links and articles I found a while back at my website (www.papergame.com). Under the recommended links there is a section on “Loan Fraud Links”.
You might find your answer in those links.