Due On Sale Clause
I've been reading this forum and also in "Goldmining in Foreclosure Properites" by Achenbach. One thing I don't quite understand is this... Doesn't signing the deed over to someone else invoke the "due on sale" clause in most all mortgages? Is there a way around this or does it not apply for some reason.
Thanks.
Posting same answere here as the other post in case you miss it
Do a search in google on this "Bronchick" and "due on sale"
You will find that a lot of people have made a lot of money by doing things that people say the due on sale clause would be initiated. You also might google this phrase: "land trust" and "due on sale" and also this one "garn st germain act"
GL
Imagine being at the stock holders meeting and telling them that ooops we made a mistake and took all those loans that the deeds were in different names, performing well and called them all due! The number of foreclosures
increased 10%. Sorry were not going to make any money this year and no christmas bonus, etc,etc.
The Due on Sale Clause states that the lender has the right to call the entire note due if any of the terms of the initial agreement are not met, such as payments being paid or transfer of the deed without paying off the original loan.
Job of a lender is to collect interest! They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread.
To call the loan due they would be cutting their own profit.
Now, if the payments were not being made and it was a non-performing loan, they have the right to foreclose in order to recapture their property so they can sell it again.
When a lender has taken back a property either by foreclosing or calling a note due, they are “punished” by the Federal government for having that non-performing loan.
If a loan that was taken through a lender is a non-performing loan (meaning the loan is on the “books” of that lender and payments are not being collected on that loan) then it is considered a bad debt.
[addsig]