Silly owner financing question - Posted by Russ

import · June 21, 2007, 6:33pm

Posted by Rich-CA on June 21, 2007 at 18:42:21:

Usually owner financing is from equity, not on top of existing financing.

import · June 21, 2007, 6:33pm

Posted by Russ on June 21, 2007 at 18:33:41:

Hi,

This might be a silly question to ask, but I am just curious to know what actually happens when an owner, who owner finances his house to someone else, fails to make the mortgage payment? How does it affect the person who actually owns the property?

Thanks for any input.

russ

import · June 23, 2007, 9:18am

Thanks! - Posted by Russ

Posted by Russ on June 23, 2007 at 09:18:21:

Thanks everyone for your response. I was hoping that there would some laws or legal recourse in place to protect the home owner in a situation like this, but apparently not!

Thanks again.
Kazi

import · June 21, 2007, 8:42pm

Re: Silly owner financing question - Posted by John Behle

Posted by John Behle on June 21, 2007 at 20:42:12:

I’ll give the characters in the scenario names to help keep track. Let’s call the seller of the property Shelly. The buyer, buying on owner financing I’ll call Byron.

If Byron makes his payment to Shelly and she doesn’t pay on any loans she is supposed to, then Byron is at risk. Some in this situation end up losing properties or thousands of dollars if they do not set up things to monitor the situation and protect themselves.

As the buyer, Byron needs to know his payment is passed on and he is protected. Trusting Shelly is dangerous, so the best bet is to set up an escrow. Byron makes his payments to Standard Escrow Services and they make the peyment on any underlying loans and send the difference to Shelly. That way both people are protected.

So, a buyer needs to take the previous owner out of the loop and make sure those payments are made.

From Shelly’s point of view, if Byron doesn’t pay her, she of course would still need to make payments on the underlying loans and then turn around and foreclose on Byron if he doesn’t remedy the situation. Shelly of course needs to make sure those payments are made, so she does NOT want to just rely on Byron to make payments directly. She also needs an escrow set up so she is protected.

import · June 21, 2007, 8:01pm

Re: Silly owner financing question - Posted by michaela-CA

Posted by michaela-CA on June 21, 2007 at 20:01:54:

I have used www.usloanservicing.com in the past, when I did an agreement for deed. The ‘buyer’ had the payments deducted straight out of his account and I had also access to the website to monitor. Worked great and was very inexpensive (7.50 per month after initial $ 100 set-up fee)

Michaela

import · June 21, 2007, 6:50pm

Re: Silly owner financing question - Posted by Bill Jacobsen

Posted by Bill Jacobsen on June 21, 2007 at 18:50:09:

I usually make the payments myself on-line. I have the previous owner give me a pass word.

Bill