Posted by Marty Weisberg on November 26, 2000 at 11:29:13:
You raise several good points.
At the end of a trust agreement under a PacTrust when it is time for the resident beneficiary to buy, what type of issues are usually raised by lenders when a trust is involved?
Lenders seem to continually change their rules and criteria, but as best as I know it right now, they will treat the person living in a PACTrust property as the owner and thus it will be a refinance. Very often they will ask for proof of one year’s payments which is easy to produce. However if it is more advantageous to go as first time homebuyer, it would also be done that way.
How much focus should be placed on the quality of the resident beneficiary’s credit before going into a deal with a potential buyer?
This is a matter of personal preference. Most of the time I only use credit history to get more money from the resident beneficiary. In many cases it would be more beneficial to me if the resident beneficiary defaults and I can remarket the property. When the first RB came in he typically will be putting up all of the money that would be my upfront expenses, so when I bring in a second RB that would be all gravy.
I hope this helps.