Government bond money? - Posted by stacy

Posted by Nate on March 13, 2001 at 22:56:17:

Either way, it’s HIS problem, not yours. If he makes a profit, he has to give some of it back to the government.

Frankly, he shouldn’t be making a profit. Or rather, let me rephrase that. You should not even be thinking about paying a price high enough that someone who bought 2 years ago is going to make a profit.

The only way I see to make this deal happen would be to take it subject-to (don’t give him a dime more than he owes on the mortgage!) and sell on CFD or lease-option it.

The problem is that these state bond programs are not like most lender that, even if the due on sale clause is violated, will not call the loan if the payments are current. These state bond loans usually have VERY strict provisions about owner-occupancy, when and how they can sell, etc. etc. You can expect that the state bond folks WILL eventually find out if he gives up the house and they WILL call the loan due if the house is not owner-occupied.

Good luck,

Government bond money? - Posted by stacy

Posted by stacy on March 13, 2001 at 15:50:10:

Spoke to a seller today that has a townhouse he’s wanting out of. His financing is through a government bond program a bank set him up with 2 years ago when he purchased the TH. Interest rates at the time where 9% and this program allowed him to get financing at 6.8%. He really didn’t know much about the program and has contacted the bank to send him more information since he wants to sell and move. He stated “the program doesn’t allow me to refinance and if I sell before 9 years of the origination of the loan, I have to pay the government a certain percentage.” He stated the percentage is at 40% and next year will be at 50%. If he sells he must pay them back that percentage of his profit. He was referred to me by another seller and just wants out. Loan amount was originally $76,000 and now owes $74K. Properties in area at 85K up.

What’s this mean and what can I offer him?