Banks That Allow Assignment of Contract?

16 posts by 14 users

Medium 1400598380 avatar nchomes Tony Green
Residential Real Estate Agent from Winston Salem, NC
5 Posts
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Tony Green

Residential Real Estate Agent from Winston Salem, NC

May 05 '08, 09:44 AM


Anyone have any success in a bank allowing you/your investor to assign a contract? I have heard through the grapevine that Wachovia will allow it, but I don't know for sure. A local Realtor associate told me today that it is against federal banking law, but again I don't know if this is true or not. I have a current REO offer on the table with "and/or assigns" on it, but haven't gotten approval from bank yet. Anyone have any experience with this?


Edited Jun 26 2010, 05:09


Medium 1398860677 avatar poodlebanker01 Manju Dutt
Residential Lender from Woodland, CA
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Manju Dutt

Residential Lender from Woodland, CA

May 05 '08, 11:31 AM


Hi Tony,
I have a similar situation with an REO property and would like to do an assignment. The bank hasn't approved it and my agent keeps telling me that they won't accept it but I'm still waiting. If and when you do get an answer please let me know. Thank you.


Edited Jun 26 2010, 05:09


Medium 1398784872 avatar oklahoma1 Christopher Lippincott
Real Estate Consultant from Little Town, OK
689 Posts
21 Votes
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Christopher Lippincott

Real Estate Consultant from Little Town, Oklahoma

May 05 '08, 07:03 PM


The whole assigning a contract (Subprime lender) mentallity is off the table

Fraudulent and or inflated appraisals and the likes created a sizeable chunk of what we are seeing as a whole in the housing crisis

I would seriously doubt Wachovia or any of the top tiered banks would still allow it

I am curious which "federal law" it is that dis-allows selling a contract?

There are certain situations in which the assignment must be in writing.

Assignment of wages
Assignment of any interest in real property
Assignment of choses of action worth over $5,000
Assignment as collateral for a loan or debt

But I've never heard of a federal statute outlawing assignments...


Edited Jun 26 2010, 05:09


Medium 1400595872 avatar phatdizzle Juan Michael
Involved In Real Estate from Los Angeles, CA
142 Posts
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2 Awards

Juan Michael

Involved In Real Estate from Los Angeles, California

May 05 '08, 07:54 PM


Christopher,

I just found that out too. Nationwidepi shared that samething with me in the following post: BiggerPockets.com Real Estate Forum Index -> Short Sales .....

NC & Poodle .... try looking At that post for some more insight. It would be an excellent exit strategy if it could be pulled off ( legally) that is :D

Just my 2 cents


Edited Jun 26 2010, 05:09


Christopher Lippincott

Real Estate Consultant from Little Town, Oklahoma

May 06 '08, 12:19 AM


Here's the link,

http://forums.biggerpockets.com/viewtopic.php?t=18741


Edited Jun 26 2010, 05:09


No avatar medium Shi'Mere Andrus
Real Estate Investor from Torrance, CA
15 Posts
1 Vote
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Shi'Mere Andrus

Real Estate Investor from Torrance, CA

Jul 11 '08, 03:47 AM


NCHomes,

I can only speak on my experience, but it all depends on the bank. I'm new to wholesaling and I was able to put a REO under contract and the bank did allow me to use "and/or assigns". Unfortunately it fell out of escrow because the bank was asking way too much for it and would not come down on the price. :cry: I was sooooo close to my first deal.


Edited Jun 26 2010, 05:30


Medium 1400598477 avatar atl2008rei S Man
Atlanta, GA
20 Posts
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S Man

from Atlanta, GA

Jul 12 '08, 05:35 AM


Shi'Mere, could you please share more information with forum readers on this?

Which bank allowed you to use the assignment phrase please?

What contingency did you use to back out when your buyer backed out?

And if the property was under contract, why were you expecting them to continue negotiating on price?

Thanks.


Edited Jun 26 2010, 05:30


Medium 1398940100 avatar oc pro Jake Kucheck
Residential Real Estate Agent from Newport Beach, CA
1019 Posts
354 Votes
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Jake Kucheck

Residential Real Estate Agent from Newport Beach, California

Jul 14 '08, 03:30 AM


Agreed...falling out of escrow happens for things like not being able to get a loan, home inspection revealing significant necessary repairs, etc. It does not happen because "the bank was asking way too much and refused to come down". That is, however, a reason why it wouldn't go into escrow in the first place.

Good luck closing that first deal bud.


Edited Jun 26 2010, 05:31


Medium 1402858700 avatar maccius Shane Wilson
Investor from Dalton, GA
97 Posts
14 Votes
3 Awards

Shane Wilson

Investor from Dalton, Georgia

Jul 16 '08, 02:10 AM


Why not just do a double closing? A little more cost then just an assignment but it accomplishes the same thing.

You could also amend your contract with the bank to add add your buyer to the contract. Close the deal and then quitclaim your interest after you close. I've added partners to my contracts after the contracts were accepted and haven't had a problem with that. As long as everything matches up between whats on the contract and who closes it then there's no problems and no fraud.

Sign a contract with your investor to sell your half interest contigent upon you two buying it in the first place and after closing sell the other investor your interest for whatever the agreed assignment fee would be and quitclaim out of your interest.

If you have a cash buyer let them bring the cash and secure them with a security deed to close the deal. Afterwards deed your interest over to the investor for the assignment fee.

I wouldn't ever do an assignment or double closing unless I knew 99.99% that my buyer would close, however if your buyer fails then delay closing a few days and just make sure you have plan B in place to buy the property yourself. Make sure you close before the deadline so you have time to put your plan B in place before the contract expires.

Just make sure you have a good attorney or title company and document everything.

There's all kinds of ways to structure deals.


Edited Jun 26 2010, 05:31


Shi'Mere Andrus

Real Estate Investor from Torrance, CA

Jul 19 '08, 07:13 AM


Alt2008rei,

The bank was U.S. Bank. I did have a inspection exit strategy in the contract to back out if needed. It just so happened that my buyer got an appraisal and contract bids for the work and it was more than what was expected. I asked the bank to come down on the price. They were willing to take another $10,000 off of the price, but that would not have been enough. So on to finding another home to put under contract.


Edited Jun 26 2010, 05:32


Medium 1398941021 avatar john in denver John Klahn
Real Estate Investor from Denver, CO
47 Posts
20 Votes
2 Awards

John Klahn Donor

Real Estate Investor from Denver, Colorado

Jul 20 '08, 10:41 PM


I have had good luck with getting properties U/C in the name of an LLC and then selling the interest in that LLC. I buy an LLC for $50 on the Colorado Secretary of State website for each property that I wholesale. I've not had a bank refuse any of my contracts.

If you go down this road it would be a great idea to have some professionally drafted documents for the sale of the LLC.

- john


Edited Jun 26 2010, 05:32


Medium 1398942394 avatar b18bgone Cris Bell
Virginia Beach, VA
3 Posts
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Cris Bell

from Virginia Beach, VA

Jul 28 '08, 10:53 AM


john-in-denver;

I like the thoughtfulness, that you have used to accomplish your end
goal. Im going to touch base with the company attorney on that, and
see what we can do. Nice tip.


Edited Jun 26 2010, 05:35


Medium 1448323426 avatar jasonscott J Scott
Investor / Business Guy from Ellicott City, MD
15811 Posts
12289 Votes
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J Scott Verified Moderator Donor

Investor / Business Guy from Ellicott City, Maryland

Aug 03 '08, 07:02 AM


I'm finding most banks won't allow assignment of contracts these days, and while you can do a double close to get around this, if the other party (the ultimate buyer) is using any type of traditional financing, most banks won't finance through a double close because of the possible chain-of-title issues.

So, be careful trying to find a buyer if you're able to get the bank to allow you to assign...


Edited Jun 26 2010, 05:36


Medium lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com


No avatar medium Account Closed
Real Estate Investor CA
30 Posts
1 Vote
1 Award

Account Closed

Aug 18 '08, 04:11 AM


If the bank won't allow "and/or assigns" you can put it somewhere else in the verbiage of the contract and see if it gets thru...or, you can simply make up a fee agreement with the other parties involved outside of the two principle parties (buyer and seller)...most important - get it in writing!


Edited Jun 26 2010, 05:42


Medium 1399292309 avatar bokman Scott Hubbard
Rehabber from Tucson, AZ
1037 Posts
804 Votes
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Scott Hubbard

Rehabber from Tucson, Arizona

Mar 10 '09, 09:03 AM


I thought this thread was worth revisiting as several months have passed since the last post.

Anyone have any success in a bank allowing you/your investor to assign a contract?


I think this is no longer a viable option for most lenders.. Anyone have any recent successful assignments close?

Why not just do a double closing? A little more cost then just an assignment but it accomplishes the same thing.


This is the main strategy I use. However, it lacks the ability to market to FHA buyers which are a large portion of the market in my locale.

I have had good luck with getting properties U/C in the name of an LLC and then selling the interest in that LLC. I buy an LLC for $50 on the Colorado Secretary of State website for each property that I wholesale. I've not had a bank refuse any of my contracts.


The lenders I deal with (CW) (BofA) Citi) are not as open to discounts when they know an investor is the buyer. My strategy is to not inform them I am an investor, but just a regular joe homebuyer. Has anyone else used this strategy recently?

As FHA buyers are a major part of my market, I have been trying to figure out a way around the seasoning issues.

A strategy I have been experiementing with is the use of a quitclaim deed to mark transfer of title earlier in the process. Has anyone used a quitclaim deed Double Closed to a FHA buyer?


Edited Jun 26 2010, 07:32 by Scott Hubbard


Medium 1399338024 avatar hardmoneymikey Michael Culler
Real Estate Investor from Tampa Bay, FL
180 Posts
15 Votes
1 Award

Michael Culler

Real Estate Investor from Tampa Bay, Florida

Mar 11 '09, 03:02 PM


If you are doing an assignment, your buyer should be cash or hard money only. Conventional lenders will not allow it at all. You can just forget doing an assignment at all, unless your buyer is using Hard Money or Cashola.

If you are doing a double closing, FHA will not work at all, as they require at least 90 if not 180 days title seasoning depending on a few factors.

if you are trying to pull off a double closing, the best bet is to get a cool title company, a transactional funding lender, and a Fannie Mae qualified buyer. FNMA loans have no seasoning requirement.

The cool title company has to be cool because you will probably be putting the property into trust to pull it off legally. They have to produce a title commitment to the end buyer's lender.

Or they may be so cool that they produce a title commitment showing you as the seller to the underwriter, even before you own the property? This is less likely though, as I simply think it's illegal and not worth it for an attorney or title company to be involved in.

Bottom line, use an assignment when you can sell to cash and hard money buyers. Use a double closing when you can attract higher end buyers that have Fannie Mae loan approvals. But dont even bother signing a contract with an FHA buyer for a double closing, because you will be wasting your time.


Edited Jun 26 2010, 07:33


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