Posted by JPiper on November 18, 2000 at 08:47:34:
I’m assuming that the problem here is that the buyer’s lender doesn’t like the fact that you aren’t on title and have no title seasoning…therefore they won’t make the loan to your buyer.
You could assign your contract with the buyer back to the seller for a $25K assignment fee…perhaps secured by a second mortgage or a performance type mortgage.
Obviously you’re probably going to need a very good relationship with this seller to accomplish that…or perhaps you’re going to have to give him a cash inducement to pull this off.
And I would also say that I have not done this…so I don’t know if the lender would have an issue when they see the original contract in combination with the assignment…whether they simply look through the transaction and turn it down because it is obviously a tactic to get past the title issue.
You avoid this issue by re-writing the contract in the name of the original seller and your new buyer…perhaps in combination with a second or performance mortgage again. However, before I did this I would want to speak with my attorney to make sure I wasn’t doing something that could later be construed as fraud. Other issues might revolve around whether this second mortgage might be construed as “acting for another, and for a fee”, an activity that might be considered as needing a real estate license.
By the way, I think you do have the equity to sell a note. However, you would probably have to create 2 notes…the first let’s say being 80% LTV…which you would discount to a note buyer. You’d end up with a second, the downpayment, and some cash proceeds from the first. The problem may be that the notebuyers might not like the nonseasoned aspects of your deal either.