Land Trust Not Working
hi, i have done a short-sale before and was successful (i had a cash buyer). since then i am trying to do another one. i was going to try and market it and i was going to accept people with FHA loans until i heard that FHA will NOT lend on a prop that has been transfered into a TRUST. from what i hear, FHA will not lend on ANYTHING that has a break in title recently. there would be a break in title if it was transfered to a trust. so i guess the real question is, what do i have to do to sell to a FHA buyer? i know somebody who recently did it but i didnt get a chance to ask him (he said his attorney handled it). what i do know is that he had a POV and im guessing he somehow double closed. . so.......when the mortgage co. asks for a P and S contract for the loan will you make it from your "seller" to your "buyer"? any help would be great. this just struck me the other day and i have never really thought about it. thanks, Ryan
any takers?
I don't know if it is so much of the trust issue ( Ha play on words) but a seasoing issue for FHA
It is my understanding from studying LeGrand's courses that land trust are not to be recorded or else it would defeat the purpose of anonymity. I guess I should add that in the scenario he was illustrating, it involved obtaining a property sub to from an owner occupant.
shamund, you are talking about the beneficial interest correct? wouldnt you want to record the deed to trust so every one knows the property is in a trust and the trust holds title.
but i believe Ryans question was similar to another post of mine that nobody has ansrewed. i believe he is talking about seasoning issues and selling to a conventional or F.H.A. buyer. there is a method of doing it were you dont record the trust untill sometime near closing so the loan is already underwritten. but im confused about the bank wanting a purchase contract and whos name would go on it. it seems you would have to put the sellers name on the purchase contract? im confused along with Ryan.
i know F.H.A. considers a property deeded into trust as a break in title.
but as far as conventional i dont know yet if they consider this as a break in title, and you could record the seller with beneficial rights and keep the transfer to you unrecorded.[ Edited by ZinOrganization on Date 12/05/2004 ]
put the property in the the SMITH FAMILY TRUST. that way it looks like peggy smith did it for estate planning purposes. you record the warranty deed to trustee. you do not record the land trust or the asignment of benefical interest. if anyone, like the lender, wants to see the land trust documents, it has peggy smith as the trustee. do not show anyone the assignment of benefical interest that would show that peggy no longer had an interest in the property.
why are you so worried about fha. there are so many good programs out there right now. I would not even want an fha buyer. their inspections are too picky and you must fix everything. you have no leverage.
brenda
thanks for the reply brenda. im not really that worried about F.H.A., its conventional buyers that im worried about, although in my area alot of realtors do get there buyers pre approved F.H.A. its easier for them if they dont have a big down, but harder for us. lots of low income casino workers around here. your absolutly right, i dont want to deal with F.H.A.
but weather F.H.A. or not, is a Conventional lender going to say that by the property being deeded into trust that it breaks the chain of title and they wont loan on it? thats what im worried about.
and if thats the case is there a way around it?
My understanding is that there is law that the lenders must allow homeowners to deed property into trusts that they control for estate planning purposes. Hence the SMITH FAMILY TRUST.
That is correct Bgross. Good info. Eventhough it "breaks title", lenders still can't call the loan due b/c it is a trust that is holding the title.
[addsig]
Brenda, the only problem with that is if you end up in court, having to explain that you put a property into a trust called the "Smith land trust" for estate planning purposes may be hard to explain. I think Legrand used to reccomend this but has since reccomended against it.