What needs to be done is a mortgage is placed on another property that can be walked to the new property when the constuction is done. Or the new property is refinanced to pay off the note on the other property.
A performance mortgage Secures performance of a agreement.
Or another way to do it would be put a first mortgage on the land for the final amount and cross colateralize it with another property that gets released when the subject property is complete and signed off by a appraser for the value needed to secure the underlying at a predeterminded LTV.
Is a Performance Mortgage assignable? - Posted by WaynePa
Posted by WaynePa on January 31, 2002 at 11:00:03:
Hello all,
Gotta good one here I have a Note Broker willing to work with me if I can move problem notes. Such as notes for prefab home and MH where only the foundation is in place. He says he can he can move the notes once the house is in place but he wants to put together a program where he can give mortgages while construction is in process.
Couldn’t I use a Performance Mortgage as security for a house that isn’t there yet? That would make the mortgage marketable on the secondary market would it not? What do you guys think?