Dodd Frank - Can private seller subordinate and carry back a second mortgage?


#1

Hi All,

I have not done any seller financing since Dodd Frank and I am wondering what I need to be aware of…or even if I can still do this?

Situation:

Free & Clear House. (No Due On Sale Clause)
My Private lender will loan me 60% for a 1st Position Only.
Seller willing to subordinate and carryback the balance up to 5 years (would require a balloon to make the payments reasonable).
I would find/sell to a tenant/buyer.

Is this possible under DF?
There is so much scattered info out there…I am just not clear?
What do I need to do to comply?
What are the pitfalls?

Thanks!


#2

No worries. You can do a Dodd-Frank type loan a year without any problem. If the house is free and clear it is the Seller who has to worry about Dodd-Frank potentially, but the Buyer doesn’t have to worry. It might be simpler to do a Sandwich Lease Option anyway. If your lender is sort term (1 year or something like that) you have a timing issue. You need to know both the amount, the term, and the rate. Without all of the equation it is tough to know your options.


#3

Speaking with an experienced real estate attorney may also be a good idea - they do tend to keep abreast of the new laws that impact on real estate.