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.