Posted by Michael Morrongiello on February 03, 2000 at 23:52:18:
The “fannie mae” mortgage instrument is a good security instrument however it does not allow you to record this as a “wrap around” mortgage unless you have a special addendum prepared. It might be best to have a competent attorney simply prepare a wrap around mortgage instrument for you.
As for your proposed structure, I LIKE IT. The 80% +/- starting LTV threshold for that 1st lien makes it attractive for a paper funder. Seasoning the note for a while also helps. Just make sure you can conclusively document the payments collected.
As for your concerns over the underlying debt. Typicaly when we purchase a mortgage from you we would then PAY OFF the underlying debt from the proceeds from the sale of the mortgage. You do not need to pay it off first. I would NOT recommend deeding the property to the buyer without securing your positon somehow otherwise they might be able to encumber the property without you say so.