Treasury bond as security - Posted by Jeff Ronsiek

Posted by Brent_IL on April 01, 2002 at 24:36:03:

In contrast, sellers who are most interested in selling, or are unsophisticated, or clueless will also readily accept Treasury or other bonds as collateral for a PPM. They don’t ask many questions.

I’ve had sellers accept discounted corporate bonds that were margined and used the difference between the face amount and the margin loan as sole collateral for the seller-financed loan.

This is always an option for me because it’s written that way in the purchase contract. It would have to be stricken-out. Since I’m the only one who knows how to fill in the contract blanks correctly the chance of me eliminating this clause is slim.

I don’t recommend this as a CRE technique.

Treasury bond as security - Posted by Jeff Ronsiek

Posted by Jeff Ronsiek on March 29, 2002 at 13:47:34:

I have recenly become the holder of several US Treasury bonds. In light of this, I would like to refinance my mortgage. (currently have high mortgage payments). I would like to find a lender who would accept my home and a US Teasury bond (garaunteed tax free income) as security, in exchange for a lower principle amount on a first mortgage. Will most lenders consider such an offer. If not, does anyone know of lenders or investers who will consider it?


Re: Treasury bond as security - Posted by J. Clifton

Posted by J. Clifton on March 31, 2002 at 20:30:09:

The ONLY lenders you should approach about bond offers are sellers in unusual situations, who may be both motivated and sophisticated enough to accept bonds as security for a carryback note. Institutional lenders or owners are not open-minded. Exotic methods should best be reserved for exotic situations.

Re: Treasury bond as security - Posted by Nate(DC)

Posted by Nate(DC) on March 30, 2002 at 11:15:38:

No “conventional” lender would do this, and a private lender would probably charge so much that your payments would not go down.

Why not sell the bonds and use the proceeds to pay down your mortgage. That would reduce the principal amount.