Due On Sale Successes
Seems everyone has the same unanswered question. Will my bank enforce the due-on-sale clause if I deed my personally owned property into an LLC?
I have seen a lot of "most likely not" and "never heard of it before" answers. But nothing concrete.
How about people actually listing the banks where they successfully made the transfer with no problems from their banks.
Wells Fargo?
GMAC?
The reason no-one is giving you any concrete answers is that there's no way to tell for sure. Bottom line, They can, so you can't rule it out.
I agree they can, but what I was hoping for is something like, "I did it with a BofA loan two years ago, and have not heard from them about it". Something like that. I complete realize this gives them the right to call it if they want to.
There are a lot of Sub-Toers on this board. Maybe a better question would be: "Who here has recently had a loan called on a property purchased sub-to?"
I think the silence will be your answer. If you need more than that, you may not be ready to do sub-to. The expenence here is worth listening to, even when it's silent.
[addsig]
tcikevin,
Alright, you want a list of lenders where we have deeded properties out of the original barrowers name and into an entity of our own?
No problem, but only a partial list, since its long.
By the way, all were transferred into a land trust, with an entity owning that.
1. Bank of America
2. Countrywide
3. Washington mutual
4. Equity one
5. Wells Fargo
6. Household/beneficial
7. Chase manhattan
8. Ocwen
9. Southtrust
10. Suntrust
11. Wachovia
12. First National
13. EMC mortgage
14. you get the picture........basically, I've NEVER had a loan called due.
The object is to keep the payments current.
Again though, as others stated, there are no 100% promises here, because a lender has THE OPTION of calling a loan due with this provision in their.
Use a land trust, and you'll be fine, espeically when using it for your own benefit. This exempts you from the DOS clause, check the laws.
Garn St. Germaine addresses this very well.
Good luck, and HTH,
Jim FL
P.S. There are plenty of other lenders, this list was just off the top of my head from recent deals.
[addsig]
Jim, thanks, just what I was looking for.
Before yours, all these related DOS posts had fallen into the "Big hat, no cattle" category. I was looking for someone who had actually gone through the process a couple times.
For me it would basically be transferring personally owned properties into my single member LLC, so the responsibility for the loans do not change.
Kevin,
Talk to your lawyer and CPA to make sure whats best for your situation.
Perhaps run this by them......
Place each property into its own land trust, and have someone you trust, a lawyer, family member, friend, you, whoever as trustee.
Then have just one LLC,or several whatever the lawyer and cpa advice, hold beneficial interest to each trust.
This way on public record, the real owner of the property is not totally known.
Also, the deeding into a trust for your own benefit is exempt from DOS clauses, as I understand it, from Garn St. Germaine.
Run that by your attny and see what they say.
Just my two cents,
Jim FL
[addsig]
About a DOS, in order to aviod this, keep beneficial interest in the homeowner, not much like 10%, you keep the 90%. If you do not want to pay it foward to the homeowner and be greedy, remeber you are trying to help them, charge them "rent" but with no payment as their 10% will be the rent proceeds. Very simple. Mike
I have only talked to a few investors who have had them called. Most had one thing in common.
Not making the payments on time.
Is there any theory that once rates rise, there may be more loans called? How to protect against that potential problem? That 10% ownership!?
If you structure it right, you won't be in the deal long enough to be effected by a significant rate increase.
This isn't a buy and hold strategy...at least not for most of us
I had one DOS called on one of my investment properties for the screwiest reason.
My long-time insurance agent hired a junior partner right out of college. When my insurance was due for renewal, junior partner did not understand the sequencing of the various loss payee clauses....so being a motivated self-starter, he CALLS THE BANK (Washington Mutual) and wants to make sure he's got the loss payee clauses correctly BECAUSE THIS IS A "SUBJECT TO" PROPERTY. The bank thanks him very much for letting them know about this and contacts the mortgage holders the next day. :-x I had to bite the bullet and arrange my own financing.
This is obviously an off-the-wall experience, one you aren't likely to encounter. But it illustrates how nothing is ever guaranteed in life!
Happy Thanksgiving everybody.
Saw the discussion about called loans and will share a story. We have been taking Subject Tos for several years in several states. Live in Oklahoma, and just now have my first called note. Bought a small house Dec. 03 from a couple who were about to be foreclosed on, who had contacted us to save what credit they had left. We did all paperwork correctly as always done. Sold the home on a CFD with understanding that we could get her refied shortly. We had the financing set up, but she would never supply paperwork needed to close. My broker and lender tried for several months, but she never came in to close the loan. Meanwhile the sellers contacted the original lender, USA Bank Home Mortgage of Missouri. The lender held our July,Aug and Sept. payments and sent them back in late September with a payoff balance due. The balance is several thousand higher than the statements I had earlier. That does not include attorney fees. We never got any late or foreclosure notices. All payments were made between the 1st and 3rd of each month with no late pays. While we are trying to ascertain the correct payoff amount, the lender orders the tenant buyer evicted. My attorney is a real estate investor and a former D.A. Also the tenant buyer is still in the home and is near 4 months behind on $ 542. mo. payments. Anyone have experience or suggestions out there? Never had any problems and have numerous letters of thanks from sellers and buyers for helping them out. Truly enjoy making money, but really try to help people in many instances.
UPDATE 11-26-04 Just found out that the sellers had contacted the lender and told them that the deed had been made over to us. The lender IS calling the DOS because of the transfer. We will pay it off this week if correct payoff can be agreed upon. Funny how many times the sellers on subject to think they still own the house. Again, the lender is U.S. Bank Home Mortgage of St. Louis.[ Edited by Lemjam on Date 11/27/2004 ]
Well the deal with the fellony warrant sounds like a mess. I agree--total garbage and I'm not so sure why a bank would care so much about this if they are getting paid. How did this all come about?
As far as BobJensen's post--I am interested to know if the lender simply sent you a letter or if they initated foreclosure proceedings. I'm sure that the veterans here like John Locke probably have had these demand letters sent to him but I highly doubt that when push comes to shove they would file a foreclosure suit in court.
bump