Posted by Stacy (AZ) on January 26, 2000 at 17:19:31:
I learned about Performance Mortgages (or more specifically for my state, Perfomance Deeds of Trust) from posts here on this board, and in Bill Bronchick’s materials.
However, the title company I deal with knew what to do, and even drafted the whole thing on state approved forms. Perf Mtgs aren’t really special. They are basically a Mtg or Deed of Trust that secures an agreement instead of a promissory note. You could call your title company and ask if they could handle it for you. As always, state laws vary, and a good attorney would also be helpful on your first one.
When buying subject to with the home placed in a Land Trust, what happens to the seller if the ‘trustee’ of the land trust defaults on mortgage payments?
Posted by Stacy (AZ) on January 26, 2000 at 12:18:23:
The seller would have a foreclosure on his credit report, unless he decided to start making the payments himself, on a property he no longer owns. That’s why these sellers need to sign the “CYA” form, that proves they understand the mortgage is staying in thier name.
Posted by Bill Gatten on January 26, 2000 at 14:03:50:
Not mentioning any names: but…that just might be why you’d want to use a bonded, third-party non-profit corporate (unrelated and unbiased) entity as trustee…with a bonded collection and disbursment service at its disposal.
The reason I ask: I suggested a Land Trust to a potential seller. He wants 10K cash for his 25K equity, but he wants to eliminate any possibility, however miniscule, that he could lose his business. Any suggestions??
Posted by Stacy (AZ) on January 26, 2000 at 16:59:21:
A perfomance mortgage would work. I used this on one of my subject-to deals a few months ago. My seller wanted some assurance that he could get the property back if I defaulted on his loan payments. For example; an agreement that if the payments become 60 days late, the seller could foreclose on the performance mortgage and regain title.
I didn’t see a problem with this, since I fully planned on making his payments and it didn’t cost any more to set it up. I ended-up making one payment and reselling to a new-loan buyer, anyway. But without it, he wouldn’t have done the deal.
Now, here’s where Bill Gatten comes in to explain the PACTrust…
