Posted by chris on March 12, 2000 at 24:31:51:
The loan would remain in his name and would appear on a credit report when he applies for his new loan.
You would be a resident beneficary and the seller could show the income from you when applying for his new loan.
PACTrust Help/ Question… - Posted by Josh
Posted by Josh on March 11, 2000 at 22:00:31:
When a seller “SELLS” via PACTrust, is his name off the deed so when he applies for a new loan on another property it won’t count against him or even show up at all?
Thanks, Josh.
Re: PACTrust Help/ Question… - Posted by Bill Gatten
Posted by Bill Gatten on March 13, 2000 at 23:41:02:
When a mortgator places his property into a PACTrust, and goes out to buy another house, in order to keep his debt to income ratio at the maximum (100%), he heeds a letter to his new lender explaining the terms of his PACTRust, and showing that it does not involve any negative cash flow, maintenac or repairs costs and obligation; and that it entails no vacnancy factor (since it is for, say 5-6, or 7 years or more).
In my experience all banks (without any exception that I know of) have regarded the PACTRust transactions as they would a Wrap or Contract, and consider the property sold, even though their borrower is still on the loan.
If you need a copy of the letter I use for that purpose, just let me know.
Bill Gatten
Re: PACTrust Help/ Question… - Posted by ChuckP
Posted by ChuckP on March 12, 2000 at 06:33:49:
Yes and no. I am going to assume that you are in a deed of trust state and not a mortgage state. The seller’s name will remain on the deed of trust which secures the mortgagee’s lien against the property. When the lending institution sees this and sees that the accompanying deed is now in trust, they are most likely going to assume that the mortgagor, your seller, placed their property in a living trust for estate purposes. Especially if you named the trust something like the “John and Mary Smith Trust”. So yes, technically their name is not on the deed, but any competent attorney should be able to determine what has happened. That’s why a lending institution records a deed of trust along with the deed, assuming a deed of trust state, so that any transfer of ownership can be challenged, by statute, given the exchange. Note that trusts are governed by the Garn-St. Germain Depository Institutions Act of 1982 for further details.
Hope this helps and I am always open to further analysis.
Chuck
Re: PACTrust Help/ Question… - Posted by Brad Crouch
Posted by Brad Crouch on March 12, 2000 at 04:33:49:
Josh,
Yes the seller’s name is off the deed. The property will be in the name of the trust and trustee.
But the seller’s name will remain on the loan until the trust is terminated and the property is sold (at the then current FMV).
The loan will still show up on the seller’s credit report.
Brad