wraparound mortgages - Posted by Mark

Posted by JohnBoy on March 21, 2001 at 01:21:06:

Um, I’m no expert…Piper told me! Besides, wasn’t it him who always says honesty is the best answer??? LOL

wraparound mortgages - Posted by Mark

Posted by Mark on March 18, 2001 at 23:44:26:

Hi Ed and other real estate entrepreneurs,

My question regards wraparound mortgages. Do they trigger “due on sale clauses” ?

Thank you for all replies

Mark

Re: wraparound mortgages - Posted by Ed Garcia

Posted by Ed Garcia on March 19, 2001 at 10:11:02:

Mark,

Not if they’re sold on a Land Contract that’s not recorded.

Ed Garcia

Re: wraparound mortgages - Posted by JPiper

Posted by JPiper on March 20, 2001 at 01:28:17:

I love it when I get to disagree with you! A land contract will trigger the due on sale clause whether it’s recorded or not. The bank just may not be aware that it all took place if it’s not recorded.

JPiper

Re: wraparound mortgages - Posted by Ed Garcia

Posted by Ed Garcia on March 20, 2001 at 10:12:00:

Jim,

What are you smoking? I made the statement in the manner that I did because of course as you say, the bank wouldn’t know. If the bank doesn’t know, then how can it trigger? It’s perfectly legal because it’s after the fact on the disclosures.

There are lenders that would consider a wrap a junior lien and not tamper with it, there are also lenders that just can’t afford to take the time to follow up and will let it slide. But when doing a deal we don’t have the luxury of second guessing the lender, so you know what my suggestion was, what’s yours?

(smile)

Ed Garcia

Then what do you do??? - Posted by Denise FL

Posted by Denise FL on March 20, 2001 at 09:29:24:

Thanks!

A Philosophical Question… - Posted by JPiper

Posted by JPiper on March 20, 2001 at 10:54:11:

Ed:

Here’s a philosophical question for you: If a tree falls in the forest, and no one heard it…did it make a sound?

Seems to me this is a similar question regarding an unrecorded wrap. If a property was transferred, and the bank didn’t know it, was the due on sale clause triggered?

The answer of course is that it was triggered…the bank just doens’t know it…and therefore doesn’t act. The fact that the bank either knowingly or unknowingly doesn’t act doesn’t affect whether the clause was triggered. In fact, whether the bank “knows” is not a requirement for triggering the due on sale clause.

Whether it is a good idea or not really has nothing to do with whether the clause was triggered either.

Have a nice day Ed.

JPiper

Re: Then what do you do??? - Posted by JPiper

Posted by JPiper on March 20, 2001 at 10:58:36:

I use various strategies regarding properties with DOS clauses. If I’m a seller of a property with a DOS, I typically do a lease/option, although sometimes I do an unrecorded land contract. Both trigger the clause, but the bank is going to be unlikely to be aware of either.

If I were a buyer, my preference would be to have the seller deed to a trust, and then assign the beneficial interest to me, out of sight of the lender. This also triggers the clause, but again the bank is unlikely to be aware of it.

Bill Gatten has a technique which he says doesn’t violate the DOS…called the PacTrust. It’s another possible method.

JPiper

Re: A Philosophical Question… - Posted by Ed Garcia

Posted by Ed Garcia on March 20, 2001 at 19:25:15:

Mr. Piper,

Tell me. If you’ve cheated on your wife, and she doesn’t know it, is that the same as, if you’ve cheat on her and she does? I’m assure you, that, that tree in the forest only made a sound if you decided it made a sound. And I assure you, that if you cheat on your wife, she will NEVER know it.

Geez

The things I have to do to teach real-estate financing.

(smile)

Ed Garcia

Re: A Philosophical Question… - Posted by J.P. Vaughan

Posted by J.P. Vaughan on March 20, 2001 at 18:14:30:

Hi Jim,

If a man goes into the forest
and he speaks right out loud,
and his wife isn’t there to hear him,
is he still wrong?

LOL,

JP

Re: A Philosophical Question… - Posted by JohnBoy

Posted by JohnBoy on March 20, 2001 at 23:11:55:

Actually, it’s more like if you cheated on your wife and TELL your wife you cheated, then she won’t believe you any way!

Now that she doesn’t believe you…did you still cheat??? LOL

Re: A Philosophical Question… - Posted by JPiper

Posted by JPiper on March 20, 2001 at 20:04:05:

Mr Garcia:

I’d keep your day job…Socrates you’re not! LOL.

JPiper

Re: A Philosophical Question… - Posted by JPiper

Posted by JPiper on March 20, 2001 at 20:04:50:

LOL. I already used my best line on Ed.

JPiper

Re: AMEN J.P., you tell him…n/t - Posted by Ed Garcia

Posted by Ed Garcia on March 20, 2001 at 19:26:28:

n/t

Re: A Philosophical Question… - Posted by Ed Garcia

Posted by Ed Garcia on March 20, 2001 at 23:50:22:

JohnBoy,

I should have never used the analogy of wife cheating. I forgot that you and Piper were both experts on that subject.

(smile)

Ed Garcia

Speaking of Philosophy… - Posted by J.P. Vaughan

Posted by J.P. Vaughan on March 20, 2001 at 21:58:52:

“To be is to do.” ~Sartre
"To do is to be." ~Camus
"Do be do be do." ~Sinatra

Please excuse me. Must be pre-convention giddiness…