Posted by phil fernandez on May 08, 1999 at 22:00:35:
It sounds like you might have done a wraparound or subject to the existing first mortgage. How did you structure the deal and what type of paper work was involved. Did these documents get recorded?
If I’m reading your post right, you still have a first with the bank that you are obligated to pay, whether your buyer pays you or not. You do not want to trigger the Due ON Sale clause with your bank. That won’t make your buyer start paying. Your buyer only has $1,000 into the deal.
Telling the bank about your deal will trigger the Due On Sale clause. But you will be the guy that will have to pay off the bank, not your buyer. The bank might accelerate your loan and come after you for the entire unpaid balance.