Posted by Irwin on January 21, 1999 at 15:34:44:
What if a divorce court orders the property sold to a third party on an assumption, (no equity) as part of an overall property settlement? I don’t have any idea what the result is. Just food for thought. I know that if I had to defend someone in a DOS situation, and I had those facts, I’d play them to the hilt.
Telling Lender of transfer … - Posted by Johnman
Posted by Johnman on January 20, 1999 at 21:24:54:
Hi everybody,
I am about to do my first “land trust” deal. I have Mr. Bronchicks’ course on this matter and my concern has to do with the letter sent to the lender telling them of the transfer of title into the trust.
Mr. Bronchick states that the Garn-St. Germain Act does not apply to all lenders or all loans so it is best to notify the lender that the property is going to be placed into a trust and to obtain a waiver in writing.
My concern is how difficult is it to obtain the waiver? Another is what if the mortgage company says NO? Do I need to contact the mortgage co.? What kind of reisitance should I expect from the mortgage co.?
The couple that called me are three months behind and want to sign over the property to me. They just filed for Chapter 13 bankruptcy.
Any suggestions? I would appreciate your input(s).
I would like to get this done quickly. I’m in Savannah, GA.
Johnman
Re: Telling Lender of transfer … - Posted by JPiper
Posted by JPiper on January 20, 1999 at 22:43:47:
Bronchick said all that?? I guess I?ve been doing it wrong all this time. But here?s my take on it.
First, I don?t ever send a letter. I?m sure if Bronchick said to do it, that?s probably the right way. But my attitude is that I?m not going to help the bank figure anything out. I figure that if the bank discovers it (a doubtful event) then they can contact me. If they contact me I will send a letter stating what took place?.that the property was deed into a trust. Then we go from there. How many times has this happened in the last decade?? None.
By the way, I do send a letter?.a letter changing the address on the account. But that?s it.
My theory is that the bank will have no difficulty with the transaction as long as they receive their payment in a timely fashion. And this has proven to be true.
I?m definitely open to correction on this, but the Garn St. Germaine Act applies to federally insured institutions. So as long as the institution that you?re dealing with fits within that, the transfer to a trust is permissible. Again, I?m open to correction if I?m mistaken, but it won?t change my particular method.
By the way, I would check regarding the rules concerning Chapter 13 bankruptcy. It?s possible that the court might have to approve a sale. I don?t know this for a fact, but it?s something I would check to be on the safe side.
JPiper
Re: Telling Lender of transfer … - Posted by johnman
Posted by johnman on January 20, 1999 at 22:57:14:
JPiper,
Thanks a bunch. I have read a lot of articles and strings on this site about land trusts but no one has ever mention anything about this letter to the lender. I will find out if Norwest Mortgage is a member of FDIC.
I hope to meet you at the convention. I’m a short redheaded freckle faced load mouth! hoo hoooooooo!
Thanks again.
Johnman
Re: Telling Lender of transfer … - Posted by Irwin
Posted by Irwin on January 21, 1999 at 06:03:36:
Norwest is defintely subject to Garn St.G. Act. They are one of the biggest lenders in the country. I agree with J. Piper. I use an irrevocable power of attorney and simply tell the lender I’m “handling” account and where they should send future notices. I also call the insurance agent and get added an additional insured. The transfer might have to be included in their Ch 13 plan. Be sure to have your attorney check this out.
Here’s an interesting question for the Due on Sale buffs. If a (bankruptcy/divorce) court orders the transfer to be made, can that be used as a defense against DOS?
Re: Telling Lender of transfer … - Posted by Brad Crouch
Posted by Brad Crouch on January 21, 1999 at 15:19:16:
Irwin,
> If a (bankruptcy/divorce) court orders the transfer
> to be made, can that be used as a defense against
> DOS?
The Garn St. Germain Depository Institution Act of 1982 (12 U.S.C. Code 1701(j)) section D, paragraph 7 exempts such a transfer from triggering the Due on sale clause.
7 - A transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property.
That covers the Divorce court aspect. As for the Bankruptcy court decision, I have a suspicion that paragraph 9 would apply, but I’m not certain as I do not have the regulations of the Federal Home Loan Bank Board.
Paragraph 9 says: any other transfer or disposition described in regulations perscribed by the Federal Home Loan Bank Board.
Brad
Re: Telling Lender of transfer … - Posted by JohnBoy
Posted by JohnBoy on January 21, 1999 at 11:49:01:
My guess would be no. But why would a lender call the loan due in a divorce situation? Even though the court orders the property to be transfered into one spouses name, both spouses would still be responsible for the loan if they both signed the note.
So unless a court can have the authority to change the terms of a contract a person signs with a lender that has nothing to do with the case of them getting a divorce my answer would be no defense on the DOS clause.