Mortgage and Due-On-Sale Clause - Posted by BlueAngel

Posted by blueangel on September 09, 2003 at 15:21:54:

Thanks Bill for your prompt reply! :slight_smile:

I know based on Garn-St. Germain Bill, if the loan originated after October 15, 1982, its due-on-sale clause is enforceable. Most lenders do put DOS on contract.

The financing forum recommended a few ways to get around it. One is to work with homeowner insurance (which mostly like trigger DOS)to write a new policy have both seller and buyer name one. Second is just tell the lender it’s a triple net lease. Third is to have the seller deed to a trust, and I become the beneficiary.

What’s your take in preventing the lender from bugging me on this?

Mortgage and Due-On-Sale Clause - Posted by BlueAngel

Posted by BlueAngel on September 09, 2003 at 14:39:38:

Hi,

There seems to be contradictions from different sources regarding wraparound mortgage, deed title and due on sale clause. It’ll be great if anyone could help clarify these:

a. The wraparound contract is made between the buyer and seller with seller remaining on the original mortgage and title. Since there’s no title transferring invovlved, I don’t need to worry about duo-on-sale being triggerred. Right?
b. In a message Ed Garcia mentioned only way that a wraparound will not trigger a DOS is selling under land contract that?s NOT recorded. This wouldn’t be necessary provided A is true.

Any help is appreciated in advanced.

Re: Mortgage and Due-On-Sale Clause - Posted by William Bronchick

Posted by William Bronchick on September 09, 2003 at 14:51:20:

A is incorrect; a wraparound land contract does generally trigger the due on sale

B is somewhat correct, in that as a practical matter the lender won’t find out. If you are the seller, that’s fine. If you are the buyer, it’s a big risk not recording the land contract. In terms of risking the lender calling it due versus a potential title issues, I believe the latter is a bigger risk when buying on land contract.

Re: Mortgage and Due-On-Sale Clause - Posted by BlueAngel

Posted by BlueAngel on September 09, 2003 at 23:33:39:

Hi Bill,
I just stumble across your article “How to Beat Due-on-sale clause.” It was very helpful, a big thanks!
I will be attending Learning Annex seminar this Saturday, look forward to it!