Posted by jimi on June 12, 2000 at 12:28:17:
LOL!
Subject to: Lender wants to see copy of Trust - Posted by Russ Sims
Posted by Russ Sims on June 08, 2000 at 12:44:35:
We’re being asked by 2 lenders to see copies of the Land Trusts esablished when we recently purchased a couple of properties “subject to”. We’re using the Trusts from Bronchick’s Cash Cow course. Anyone out there routinely comply when asked for these copies? Thanks!
Re: Subject to: Lender wants to see copy of Trust - Posted by JohnB_NJ
Posted by JohnB_NJ on June 08, 2000 at 22:22:41:
Russ,
I had Fleet Mortgage Group write to me asking to see a copy of the Trust agreement. They discovered the trust because of a change on the insurance. I had to change the insurance because the insurance company didn’t write Non Owner occ. policies.
Anyway, that request was almost a year ago and I ignored Fleet’s request for a copy.
I don’t care because I have zero bucks in this property and it only has about 8k in equity. I just pay them each month. They would be very foolish to call this loan due. I don’t lose sleep over this loan or any other “subject to” deals i have. I am into them for little of my money.
Good luck and good investing!
-JohnB_NJ
Lenders aren’t stupid - Posted by JohnWe (NoCA)
Posted by JohnWe (NoCA) on June 08, 2000 at 20:58:50:
I’d send them a copy of the trust, and assume they know what’s going on. People seem to underestimate the intellegence of lenders, but they’re not stupid – they just don’t care right now. There’s no reason for them to call a DOS.
With that in mind, I would just go along with it, but at least have a backup strategy if interest rates rise, and the lenders start feeling some heat.
Re: Subject to: Lender wants to see copy of Trust - Posted by William Bronchick
Posted by William Bronchick on June 08, 2000 at 17:41:53:
You have two choices - ignore them and they probably won’t follow up (some lenders ask for a copy as a routine matter, so don’t get paranoid).
Choice two: give them a copy of the trust. So long as they don’t see the assignment after the fact, it shouldn’t be an issue.
Re: Subject to: Lender wants to see copy of Trust - Posted by Scott SC
Posted by Scott SC on June 08, 2000 at 13:28:00:
Let 'em see it. That is if the beneficial interest was assigned outside of the trust.
Steve’s right though…how’d they find out about the trust?
Re: Subject to: Lender wants to see copy of Trust - Posted by Steve-Atl
Posted by Steve-Atl on June 08, 2000 at 13:00:25:
I’m not familar with Bronchick’s course, but how did the lenders find out about the trust?
Re: Subject to: Lender wants to see copy of Trust - Posted by Russ Sims
Posted by Russ Sims on June 08, 2000 at 15:08:29:
The seller’s insurance policy was changed to reflect that the property is now in a trust (had to do this to alter the loss payee). The insurance company notifies the lender of the change, and unless the lender has been notified of the trust transfer, they might get nosy. So Legrand proticol calls for a letter to the lender to notify them of the transfer. I guess there’s no harm in sending them a trust copy (lord knows they’ll probably never read it), but generally, the less they know about the transfer, the better.
Re: Subject to: Lender wants to see copy of Trust - Posted by RMW
Posted by RMW on June 08, 2000 at 23:04:47:
If you get a separate policy, don’t you need to notify the leander not to escrow for insurance, since you will be cancelling the existing policy? Otherwise you would have the house over insured which is illegal.
Re: Subject to: Lender wants to see copy of Trust - Posted by JPiper
Posted by JPiper on June 08, 2000 at 16:57:22:
In the last 10+ years I have done subject to deals I have never had a lender want to see my trust. Of course, I don?t send them a letter about it either.
Personally, I think this letter idea that some of the gurus come up with is a lousy idea. What?s the purpose? I change the address, change the insurance policy?that?s it.
Now that they?ve requested it?.you can 1) send it to them or 2) ignore it. Counting on the inability of bureaucracy isn?t a bad idea. Chances are your trust agreement obligates you to keep the contents of the trust private in any case.
JPiper
Next time leave the orginal policy alone and… - Posted by Scott
Posted by Scott on June 08, 2000 at 15:11:26:
you get a separate policy and do not tell the new insurance company there’s a mortgage on it.
Simple and no headaches
Scott
Re: Subject to: Lender wants to see copy of Trust - Posted by Ben (OH)
Posted by Ben (OH) on June 09, 2000 at 05:19:53:
Underinsurance will kill you.
Over Insuring House Is NOT illegal - Posted by Soraya(SanDiego)
Posted by Soraya(SanDiego) on June 08, 2000 at 23:59:50:
Collecting on both policies is illegal
Soraya
Re: Subject to: Lender wants to see copy of Trust - Posted by Russ Sims
Posted by Russ Sims on June 09, 2000 at 02:08:32:
Thanks Jim
This begs the question: if you change the insurance policy,isn’t the lender notified? Or could it be that they are notified, and just don’t give a hoot?
One other question: you say you change the mailing address with the lender. I assume the mailings come in the name of the mortgagor?
Thanks for your help!
Russ
Re: Next time leave the orginal policy alone and… - Posted by Steve-Atl
Posted by Steve-Atl on June 08, 2000 at 16:01:03:
Scott:
I like the simple approach with minimum headaches too. Leave the existing policy as is. It gets paid as part of your underlying payment and nothing happens to tip off the lender.
If you are going to keep or lease option the property, I suggest you go ahead and get a new policy with you as the insured. If you are going to sell with owner financing, I typically wait the short period until it sells and then require the new buyers to get a new policy with me as an additional insured (as the mortgagee). That way I can avoid the cost of a policy myself.
Right… and the first policy is useless!! - Posted by Scott
Posted by Scott on June 09, 2000 at 08:19:54:
The orginal seller has no interest at this point so the first policy is useless.
Scott
Re: Subject to: Lender wants to see copy of Trust - Posted by JPiper
Posted by JPiper on June 09, 2000 at 08:25:39:
Sure, when you change the insurance policy the lender is notified?.at least via the insurance department. When the new policy arrives it will show the prior owners name and a new additional insured.
In your case though, you did the added thing of notifying someone that the property was deeded to a trust, and that all correspondence should be sent to the trustee. (I think this is what you did). I don?t know where this letter went, but chances are it didn?t go to the insurance department.
So maybe the insurance department sent the letter?.although I doubt it?.I?m not getting these letters. I think the insurance department just checks to see if the insurance policy matches the underlying loan. What seems more likely is that when you send a letter of the type you sent, it goes somewhere else, they have to change a variety of things on the loan, which may well trigger a response somewhere from within the bureaucracy. By the way, at one time I completely changed an insurance policy?.a brand new name. NationsBank, the lender at the time, STILL didn?t send a letter for the two years+ that they had the loan. Only when the loan got sold, AND the policy was renewed, did the new lender pick it up. So some insurance departments may well be better than others.
One of my closing documents is a letter signed by the mortgagor changing the address with the lender. And yes, it arrives in the name of the mortgagor. So do all the credit card solicitations, etc etc etc. It?s pretty amusing to know what?s being done with a name.
JPiper
Re: Right… and the first policy is useless!! - Posted by RMW
Posted by RMW on June 09, 2000 at 09:13:58:
Thanks for the response. But, why pay for a policy that you don’t need?
Because - Posted by Scott
Posted by Scott on June 10, 2000 at 13:21:07:
Because any changes in the first policy will usually trigger the bank in notification of the transfer.
It’s usually included in the monthly payment anyway and why do anything to notify the bank when it can be easily avoided?
Scott
Re: Because - Posted by Phillip
Posted by Phillip on June 11, 2000 at 10:06:31:
Therefore it would be okay to not asked to be placed on the existing policy as an additional insured, nor purchase another policy on the property and continue as is? What occurs if there is a loss without being on the policy, and what about the t/b on the policy as well?