Wraparound mtg question - Posted by robert

Posted by Randy on September 30, 2003 at 16:13:12:

By A wrap I assume your talking a CFD or Land contract, in that case she does have an insurable interest. She would have an equitable interest for a future value over your contract price as the CFD is recorded. She would need to secure her own insurance unless you want to and escrow the premium for her.

Wraparound mtg question - Posted by robert

Posted by robert on September 30, 2003 at 15:11:36:

I have a neat little 3/1 SFR and want to put a wraparound mtg. on it instead of L/O-ing it. My buyer is a “graduate” from our owner finance program in one of our mobile homes.She was great, 3yrs of payments never one past the 1st of the month. She is a hispanic with not bad credit just no credit.Finally the “Question” is how do you handle the insurance on the home. Do I place it and she pays me for the premium? She won’t be the owner so she has “no insurable interest” until the end of the loan. And also I am guessing I will be able to capture the depreciation an not her? Thanks in advance for any input!

Re: Wraparound mtg question - Posted by Brent_IL

Posted by Brent_IL on September 30, 2003 at 16:19:11:

If you are using a wraparound mortgage loan, she is the owner. That’s her insurable interest. You are providing financing with a PMM. You are the former owner.

If you are doing something with a delayed title transfer, get the insurance, make her responsible for paying for it, and add the premium onto her monthly payment. She pays you; you pay the insurance company.

The owner of record gets the depreciation. If there is more than one owner, you can make arrangements to divide the depreciation unequally for a little more effort.