If you are referring to a land trust, the ONLY document that ever gets recorded is the deed granting title to the Trustee. Once that is done, the property is no longer realty, but personal property and the transaction is covered by the UCC, not mortgage law. Personal privacy laws go into effect and nothing further is recorded.
What the NC AG thinks is meaningless. He is impotent as a state official dealing with Federal law. Land trusts are legal in NC under Federal law, under the new HB 725, and under NC Senate Bill 679. They are absolutely legal in NC and I have a partner who uses them there all the time.
On the other hand: "Subject to" transactions in North Carolina will be illegal in NC unless you are a realtor, or you use a land trust. Remember, land trusts have been a tool of the wealthy for over 100 years to convert real property to personal property. This enables them to enjoy the related privacy and protection. Do you really think politicians are going to pass a law restricting the rights of the people who buy them their office? Not likely.
And do you really think banks will take away the favorite tool of their wealthiest depositors? Not likely. Trusts are safe.
Am I incorrect? I thought the legislation specifically prohibits using a trust to do a sub2 transaction. How would the AG find out? The same way they have been finding out...when the Seller claims he was taken advantage of and reports the Buyer. The investors the AG have been going after thus far have all used trusts.
[addsig]
You asked: "Am I incorrect? I thought the legislation specifically prohibits using a trust to do a Sub To transaction. How would the AG find out? The same way they have been finding out...when the Seller claims he was taken advantage of and reports the Buyer. The investors the AG have been going after thus far have all used trusts. "
_________________
You are incorrect. The AG in NC reported "hundreds" of subject 2 defaults and that is the reason for the legislation. There was an especially bad case where two guys used a landtrust wrongfully to defraud their client that raised the attention to land trusts. They made themselves both beneficiaries and trustee, a no-no. However, HB 725 will outlaw all "subject to" transactions in North Carolina unless you are a realtor, or you USE A LAND TRUST, which is exempted by both Federal law, this bill itself, and NC Senate Bill 679.
Attorney Bill Bronchick says that the proposed legislation requires the lender to be notified and to approve of the sub2 transaction. That is not likely to happen.
[addsig]
Lender might be willing to allow you to assume the first, possibly charging a fee. I would think they would be happy to do it if the current borrower is in default-
Welcome. To simplify, this is the sub to forum. There are two ways to do a sub 2 -- the traditional way which is subject to mtg law. Yes it violates the DOSC and no the DOSC is not often called.
The other way is using a traditional land trust where you can do your own paperwork which is risky, or have an attorney do it which is very expensive, or a NARS equity holding trust -- they are slightly different. The trust docs are copyrighted and must be prepared by NARS. That may be the disadvantage but the advantage is the docs are reviewed by accounting and legal depts. The trust converts the property to personalty as detailed above. It is not subject to the DOSC.
The main difference between the two is the protection afforded both the seller and buyer by the trust. The seller has no protection with a sub 2.
i am dealing with them right now on a property i took sub-to and i presonally hand deliver the payment to them and i tell them that i pay the mortgage for the owner now. they have never even questioned it. its none of their business. REIKID, even if he did deed it into a trust its not like it doesnt show a transfer of title on the records. I believe that they can call it due as long as it tranfered "behind their back" even proving that they are benificiaries im not sure thats good enough. However, If i were him i would simpily fax over the benificial rights and prove that its "not yours." eitherway, its not a big deal, like you said
Hmmmm, Zin raises a good point. What happens if one does not pay (ignores the notice) but you continue to pay the mortgage promptly every month. Will they foreclose on the property? Return the payments you send?
Foreclosure 101 if they continue to accept and CASH the checks they can not foreclose...
And unless there isnt value in the property why would you not make the payment and allow them to foreclose[ Edited by IBuyHousesInc on Date 11/15/2005 ]
Wow. Please let us know if you are able to figure out:
1) What tipped them off?
2) What their rationale is for losing tens of thousands of dollars in interest payments when they make you refi with someone else even though your payments were being made on time.
"Foreclosure 101 if they continue to accept and CASH the checks they can not foreclose... "
ABSOLUTELY UNTRUE. If a transfer occurred without the lenders PERMISSION on a non-assumable loan he very well can foreclose. He can foreclose for many reasons not having to do with the actual house payment itself.
Great Question... This one is probably for John, I hope he puts his two cents in...
However, for me the reason is purely economics... I can buy more property with the small mountain of capital I have... I imagine for some its the only way they can purchase property...
And I believe the idea that we are all sneaking around is a little too extreme..
I get my own insurance on the properties, send the lender the monthly payments using our corporate checkbook, send the lender authorization to speak on behalf of the borrower even get a payoff from the lender by escrow, which should put up a red flag that a transfer is taking place..
I have not had a single issue with a lender calling a loan... Most of the time my payment history, although it is relatively short, with the lender is much better than that of the borrower..
And understanding the reserve requirements for lenders by the Government on loans that are in "Good" Status and those that are in "Collection" status makes the decision of the lender to call a note not necessary an economic one..
With all of that said, an Investor should not purchase subject to unless they have the reserve amount to bail out the property incase the lender does call.
As for foreclosing while accepting payments just isn’t done...
The title insurance company I use relies on the basis that if the lender is accepting the payment that they do not have the legal right to foreclose on the property and must reinstate the loan.
Which is why lenders send back payments un-cashed on properties in foreclosure if the payment amount is not sufficient to reinstate.
[ Edited by IBuyHousesInc on Date 11/17/2005 ]
It would be hard to believe a lender would continue to collect payments when they are accelarating the Due on Sale clause. To me this would mean they are in agreement with the title change by accepting payments and it would be an excellent argument in court for the current deed holder as to why they continued to collect payments knowing full well it was not from the original owner. So I will go along with IBuyHouses on this one.
First we have not been told what kind of loan this was, just a guess from what I gather from reading, it was probably a FHA loan, if not, I along with others would need much more information to assess what actually happened.
I dont hide anything, as i stated in the begining, i hand deliver payments to that SAME mortagage company thats foreclosing on him. I dont know about you people but i take houses sub-to atleast once a month or so and i sell them immediatly. I put them on the market within a week of receiving the deed.
This is Exactly what i do. I fax them an authorization to release and order a payoff and reinstatment. I tell them Im bringing the loan current and im helping out the owner. (which i am) they dont even ask or care though. I then get the figure, wire the money to them and start making payments until its sold, its pretty basic. To tell you the truth i never even make the payments on time. if i have it for a little while ill make one payment like every two months just to keep it out of foreclosure. I dont understand the big issue with everything.
Although I think John Locke answered this question very well let me try again.. And I agree the Lender has the legal right to accelerate the Due on Sale clause on transfer of title.
However if the lender is continuing to accept the payments by cashing the payments they do not have the right to follow through with the foreclosure, at least in California.
I have stopped trustee sales by producing a certified copy of a check cashed by a lender during the foreclosure process. Now that could just postpone the process, which in California would give me another 111 days.. But I have never had a lender call a loan after the reinstatement.
Colinl22
My understanding is that they must give you a 30-day notice to pay the amount in full before they can initiate the foreclosure process.
Now here is a question for people smarter than I, maybe John Locke you can answer this one for me.
Since I haven’t had a DOS called I have never had to answer the question…
In California the foreclosure process allows the borrower a 90 day period to reinstate the loan by bringing the arrearages current at which point if the loan is not brought current lender must file a notice of trustee sale which gives the borrower a 21 day period to pay the loan off completely to avoid a trustee sale.
On a due on sale call do they still give the 90 days since the lender is not allowing the reinstatement?
And I am sorry for such a stupid question..
Michael Quarles " Marketing is the key to Successful Investing"
[ Edited by IBuyHousesInc on Date 11/19/2005 ]
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;
so this means that if you give yourself 99% beneficiary interest in the trust and the borower 1% they cannot call the loan due for that particular contract[ Edited by sporty240 on Date 11/19/2005 ]
So the seller tried to get a home equity line of credit after you acquired the property Subject 2? Sounds like a strong argument for filing the deed. Did they understand that you would own the property afterthey signed the deed?
Yes, it would be surprising, considering the Fed penalizes lenders who exercise their right to call a note due.
_________________
"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 05/01/2006 ]
If the bank loans out $100,000 and that becomes a nonperforming asset, the bank is prohibited from loaning out the same amount in new loans. As the number of nonperforming assets increase, the ratio increases and could be many times the value of the assets. It is absolute insanity for a bank to risk turning a performing asset into a nonperforming one.
[addsig]
If you are referring to a land trust, the ONLY document that ever gets recorded is the deed granting title to the Trustee. Once that is done, the property is no longer realty, but personal property and the transaction is covered by the UCC, not mortgage law. Personal privacy laws go into effect and nothing further is recorded.
Da Wiz
not a lawyer
What the NC AG thinks is meaningless. He is impotent as a state official dealing with Federal law. Land trusts are legal in NC under Federal law, under the new HB 725, and under NC Senate Bill 679. They are absolutely legal in NC and I have a partner who uses them there all the time.
On the other hand: "Subject to" transactions in North Carolina will be illegal in NC unless you are a realtor, or you use a land trust. Remember, land trusts have been a tool of the wealthy for over 100 years to convert real property to personal property. This enables them to enjoy the related privacy and protection. Do you really think politicians are going to pass a law restricting the rights of the people who buy them their office? Not likely.
And do you really think banks will take away the favorite tool of their wealthiest depositors? Not likely. Trusts are safe.
Hope this helps.
Da Wiz
not a lawyer
BB,
I have contacted lawyers here and they all say, that land trust are legal in NC. You just have to disclose your position.
As long as everything is disclose they will touch it. Soon as you intentional fail to disclose your position, they will not close for you.
Da wiz is right on.
BB,
I have contacted lawyers here and they all say, that land trust are legal in NC. You just have to disclose your position.
As long as everything is disclose they will touch it. Soon as you intentional fail to disclose your position, they will not close for you.
Da wiz is right on. In fact i think Da wiz is an undercover lawyer. Trying to disguise his identity. If not he is very knowledgable.
If the bill passes and becomes law you would have to be a licensed realtor to do sub to deals.
Am I incorrect? I thought the legislation specifically prohibits using a trust to do a sub2 transaction. How would the AG find out? The same way they have been finding out...when the Seller claims he was taken advantage of and reports the Buyer. The investors the AG have been going after thus far have all used trusts.
[addsig]
King,
You asked: "Am I incorrect? I thought the legislation specifically prohibits using a trust to do a Sub To transaction. How would the AG find out? The same way they have been finding out...when the Seller claims he was taken advantage of and reports the Buyer. The investors the AG have been going after thus far have all used trusts. "
_________________
You are incorrect. The AG in NC reported "hundreds" of subject 2 defaults and that is the reason for the legislation. There was an especially bad case where two guys used a landtrust wrongfully to defraud their client that raised the attention to land trusts. They made themselves both beneficiaries and trustee, a no-no. However, HB 725 will outlaw all "subject to" transactions in North Carolina unless you are a realtor, or you USE A LAND TRUST, which is exempted by both Federal law, this bill itself, and NC Senate Bill 679.
Da Wiz
not a lawyer
Most sub2 investors use a trust anyway, so this legislation will have no teeth, IF what you say is correct.
[addsig]
Attorney Bill Bronchick says that the proposed legislation requires the lender to be notified and to approve of the sub2 transaction. That is not likely to happen.
[addsig]
You are right gene to a point. All banks are federally insured. Even private banks. So state banks would still have to follow fed regs.
The Federal govt. exempts land trusts from the DOSC. Garn-St. Germain Act of 1982.
Da non-lawyer Wiz
Da Wiz,
I like what you are doing with your name. You have more remixes than P. Diddy.
Lender might be willing to allow you to assume the first, possibly charging a fee. I would think they would be happy to do it if the current borrower is in default-
Chris
Icahbod, what is your beef?
[ Edited by BoboTheKing on Date 06/13/2006 ]
Chris,
Welcome. To simplify, this is the sub to forum. There are two ways to do a sub 2 -- the traditional way which is subject to mtg law. Yes it violates the DOSC and no the DOSC is not often called.
The other way is using a traditional land trust where you can do your own paperwork which is risky, or have an attorney do it which is very expensive, or a NARS equity holding trust -- they are slightly different. The trust docs are copyrighted and must be prepared by NARS. That may be the disadvantage but the advantage is the docs are reviewed by accounting and legal depts. The trust converts the property to personalty as detailed above. It is not subject to the DOSC.
The main difference between the two is the protection afforded both the seller and buyer by the trust. The seller has no protection with a sub 2.
Good luck to you in your real estate career.
Da Wiz
not a lawyer
[ Edited by mtnwizard on Date 06/13/2006 ][ Edited by mtnwizard on Date 06/14/2006 ]
Since when is every single topic or real estate situation unique and deserve a totally unique response?
There is a ton of repeat situations in similar thread categories that get repeat answers!
Maybe a solution is having a FAQ area or a post it on popular common situations and answers.
What lender is it?? If you put the property in a trust how did the lender find out. Are they still cashing your checks?
1. You can refi yourself.
2. If you sold it CFD or Lease option try to get your new buyers refied.
3. If you are renting it you can sell it outright.
More info please.
[ Edited by theREIkid on Date 11/15/2005 ]
The lender is Citimortgage. I have not spoken to the lawyer yet. I had to send them an authorization letter first.
If you need a lender that will refi a subto pm or email me.
i am dealing with them right now on a property i took sub-to and i presonally hand deliver the payment to them and i tell them that i pay the mortgage for the owner now. they have never even questioned it. its none of their business. REIKID, even if he did deed it into a trust its not like it doesnt show a transfer of title on the records. I believe that they can call it due as long as it tranfered "behind their back" even proving that they are benificiaries im not sure thats good enough. However, If i were him i would simpily fax over the benificial rights and prove that its "not yours." eitherway, its not a big deal, like you said
If i can be blunt... having a DOS called is why you always have reserves or dont do the deals.
So you had one called, big deal, pay the darn thing and stop worring about it.
Just learn from this experience and fall forward...
Quote:
On 2005-11-15 15:29, IBuyHousesInc wrote:
If i can be blunt... having a DOS called is why you always have reserves or dont do the deals.
So you had one called, big deal, pay the darn thing and stop worring about it.
Just learn from this experience and fall forward...
Agreed, or just dont pay it at all, see what happens.
But i think it would be beneficial for all to know what the exact reason they called it for or how they found out.
Hmmmm, Zin raises a good point. What happens if one does not pay (ignores the notice) but you continue to pay the mortgage promptly every month. Will they foreclose on the property? Return the payments you send?
Let us know your experience either way.
Thanks,
JS.
Foreclosure 101 if they continue to accept and CASH the checks they can not foreclose...
And unless there isnt value in the property why would you not make the payment and allow them to foreclose[ Edited by IBuyHousesInc on Date 11/15/2005 ]
Wow. Please let us know if you are able to figure out:
1) What tipped them off?
2) What their rationale is for losing tens of thousands of dollars in interest payments when they make you refi with someone else even though your payments were being made on time.
JohnCl
DougON,
You certainly do not understand how Subject To investing is done nor it sounds like the person who posted that had the loan called.
500+ Subject To deals never a loan called, must have done it the rigtht way, one would think.
John $Cash$ Locke
[addsig]
"Foreclosure 101 if they continue to accept and CASH the checks they can not foreclose... "
ABSOLUTELY UNTRUE. If a transfer occurred without the lenders PERMISSION on a non-assumable loan he very well can foreclose. He can foreclose for many reasons not having to do with the actual house payment itself.
Great Question... This one is probably for John, I hope he puts his two cents in...
However, for me the reason is purely economics... I can buy more property with the small mountain of capital I have... I imagine for some its the only way they can purchase property...
And I believe the idea that we are all sneaking around is a little too extreme..
I get my own insurance on the properties, send the lender the monthly payments using our corporate checkbook, send the lender authorization to speak on behalf of the borrower even get a payoff from the lender by escrow, which should put up a red flag that a transfer is taking place..
I have not had a single issue with a lender calling a loan... Most of the time my payment history, although it is relatively short, with the lender is much better than that of the borrower..
And understanding the reserve requirements for lenders by the Government on loans that are in "Good" Status and those that are in "Collection" status makes the decision of the lender to call a note not necessary an economic one..
With all of that said, an Investor should not purchase subject to unless they have the reserve amount to bail out the property incase the lender does call.
As for foreclosing while accepting payments just isn’t done...
The title insurance company I use relies on the basis that if the lender is accepting the payment that they do not have the legal right to foreclose on the property and must reinstate the loan.
Which is why lenders send back payments un-cashed on properties in foreclosure if the payment amount is not sufficient to reinstate.
[ Edited by IBuyHousesInc on Date 11/17/2005 ]
It would be hard to believe a lender would continue to collect payments when they are accelarating the Due on Sale clause. To me this would mean they are in agreement with the title change by accepting payments and it would be an excellent argument in court for the current deed holder as to why they continued to collect payments knowing full well it was not from the original owner. So I will go along with IBuyHouses on this one.
First we have not been told what kind of loan this was, just a guess from what I gather from reading, it was probably a FHA loan, if not, I along with others would need much more information to assess what actually happened.
John $Cash$ Locke
[addsig]
I dont hide anything, as i stated in the begining, i hand deliver payments to that SAME mortagage company thats foreclosing on him. I dont know about you people but i take houses sub-to atleast once a month or so and i sell them immediatly. I put them on the market within a week of receiving the deed.
This is Exactly what i do. I fax them an authorization to release and order a payoff and reinstatment. I tell them Im bringing the loan current and im helping out the owner. (which i am) they dont even ask or care though. I then get the figure, wire the money to them and start making payments until its sold, its pretty basic. To tell you the truth i never even make the payments on time. if i have it for a little while ill make one payment like every two months just to keep it out of foreclosure. I dont understand the big issue with everything.
Just wondering, how long did you have when you got the due on sale letter from lender to refi or sell?
What was your outcome and what did you do to solve it?
Although I think John Locke answered this question very well let me try again.. And I agree the Lender has the legal right to accelerate the Due on Sale clause on transfer of title.
However if the lender is continuing to accept the payments by cashing the payments they do not have the right to follow through with the foreclosure, at least in California.
I have stopped trustee sales by producing a certified copy of a check cashed by a lender during the foreclosure process. Now that could just postpone the process, which in California would give me another 111 days.. But I have never had a lender call a loan after the reinstatement.
Colinl22
My understanding is that they must give you a 30-day notice to pay the amount in full before they can initiate the foreclosure process.
Now here is a question for people smarter than I, maybe John Locke you can answer this one for me.
Since I haven’t had a DOS called I have never had to answer the question…
In California the foreclosure process allows the borrower a 90 day period to reinstate the loan by bringing the arrearages current at which point if the loan is not brought current lender must file a notice of trustee sale which gives the borrower a 21 day period to pay the loan off completely to avoid a trustee sale.
On a due on sale call do they still give the 90 days since the lender is not allowing the reinstatement?
And I am sorry for such a stupid question..
Michael Quarles " Marketing is the key to Successful Investing"
[ Edited by IBuyHousesInc on Date 11/19/2005 ]
Quote:
On 2005-11-19 10:28, getitqwik wrote:
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;
so this means that if you give yourself 99% beneficiary interest in the trust and the borower 1% they cannot call the loan due for that particular contract[ Edited by sporty240 on Date 11/19/2005 ]
So the seller tried to get a home equity line of credit after you acquired the property Subject 2? Sounds like a strong argument for filing the deed. Did they understand that you would own the property afterthey signed the deed?
How did this one ever come out?
So the bottom line is make a trust 90%-10% and then at closing 10% reverts back to you?
Any updates on this situation? I am curious to know how this matter was rectified.
Yes, it would be surprising, considering the Fed penalizes lenders who exercise their right to call a note due.
_________________
"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 05/01/2006 ]
If the bank loans out $100,000 and that becomes a nonperforming asset, the bank is prohibited from loaning out the same amount in new loans. As the number of nonperforming assets increase, the ratio increases and could be many times the value of the assets. It is absolute insanity for a bank to risk turning a performing asset into a nonperforming one.
[addsig]
I could be wrong, but I believe that Fed passed their restrictions on lenders in answer to the high number of foreclosures in the 80s.
[addsig]