Can lender force me into foreclosure if I can't repay at maturity

CA · Member since 2016 · 1k+ posts · 1k+ votes

I have a rental property that has a market value of $1.5M and $300K mortgage on it... The 10 year ARM is coming to maturity around 7/17, but I can't find a lender that still does that type of loan anymore (TIC for rental)..

What is going to happen if I can't make the balloon payment at 7/17? I reached out to the bank (Stanford Credit Union) and they told me they could extend "a few months" but that does not really solve the problem...

They dont want to renewal the mortgage because they are getting out of the business themselves... Any one has a similar experience before?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Diane you need a commercial banker who understands your situation. This is a pretty foreign concept out side of Silicon valley... are you sure your loans are not joint and several.. ??

And how much other debt is in the TIC ? whats the total debt load ?

I seriously doubt though the bank wants to own a % interest in a property.. they can't do much with that....

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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
because they are getting out of that particular type of mortgage themselves... They still do other residential mortgage...
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Rod HanksBusiness Member
Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
9y
Yes, they can foreclose. Start searching now for a lender that will refi the note. I'm not familiar with TIC for rentals. Call the lenders on BP, I'm sure they can find a solution for you.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Do you have any other properties you could do a cash out to pay off this one?
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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@John Thedford
No, I can't find a lender that still does HELOC on rentals....:-((((((((((
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
when you say TIC are you a tenant in common .. and have other owners with you on the property?
if that's the case the lender does not want to make a multiple beneficiary loan??
seems like then you need to move the ownership to a LLC ( one owner ) or yourself ( one owner ) then its a no brainer for any local Santa Clara County based bank...
@Chris Mason Chris can you help this BP member this should be a slam dunk ..
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Account Closed absolutely... unless your talking about an owner occ FHA govmit backed loan.
but if this is a TIC situation... TIC's were very common in the Bay Area given the HI prices of entry.
a 1.7 million dollar home in Palo Alto for example could simply be a 3 and 2 1500 sq ft home built in the 50s on 6k sq ft lot.. same home were you live would be no more than 200k.
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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Jay Hinrichs
Jay - it is a tenant in common but individual loans... so the bank only financed my unit, not the other units... everyone has his/her lender...
Even if the bank legally can foreclosure, why would they take an extreme action against a customer who is always on time the last 10 years... at 5.25% rate, they are making money off my loan... why can't they just extend it?
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Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
9y
Originally posted by @Diane G.:

@John Thedford
No, I can't find a lender that still does HELOC on rentals....:-((((((((((
Do you have a Regions Bank out there where the property is located? If so, call them and see if they will do the HELOC on your rental. I got a HELOC last year and found they do use rental investment properties. Good luck.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
Diane you need a commercial banker who understands your situation. This is a pretty foreign concept out side of Silicon valley... are you sure your loans are not joint and several.. ??
And how much other debt is in the TIC ? whats the total debt load ?
I seriously doubt though the bank wants to own a % interest in a property.. they can't do much with that....
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Shaun Weekes
Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
9y
@Diane G.
How much does everyone own in total?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
Diane also what about all your other TIC owners whats their loan terms.. usually when these are set up they all mirror one another..
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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Jay Hinrichs
5 units in the building all sold st diff times w diff lenders... do not much similarity...
I know the 2 units on 1st floor each has about $600k in debt... I am on 2nd floor w $300k, my neighbor has $700k... the guys on 3 floor bought theirs last year $3m in cash last year... theirs is flat, so twice of my size... hence the price
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
9y
Depending on your loan agreement, they most likely can, but will probably just take advantage of compounding default interest for awhile instead of spending money on legal fees. Why can't you refi with another lender or get a bridge loan until you can? Why do you need the same terms?
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Account Closed
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@Diane G. You are doing the right thing starting early. Do not panic. I am sure you will be able to find someone to do a $300,000 loan with an additional $1,200,000 in equity.
I just found his article.
http://www.tenantstogether.org/updates/activists-p...
Do you think the bank believes you might have done this kind of financing to get around rent control laws?
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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Jessica Zolotorofe
Jessica - it is a TIC, a hybrid of you will between commercial and residential....few banks touch it... Stanford credit union, my current lender, was in that market 10 years ago but not anymore...
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Diane G.
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CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Account Closed
Michael - this article is talking about apt trying to become TIC... mine was TIC 15 years ago...but thanks
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Account Closed
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@diane Was your building rent controlled in the past?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
Ok so this is really a condo project and your TIC describes a single condo or Flat correct ?
this should simply be dialing for dollars.... I suspect Chris Mason who is local lender there will be able to help you no problem.. good that your jumping on it with some time to process the application.
And congrats on a monster SF investment.. 300k and 1.7 value.... who needs cash flow LOL
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Account Closed Exactly you hit the nail on the head friend of mine in SF made killings doing TICs to circumvent rent control.... !!!!
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
9y
A TIC? You mean a tenancy in common? Like the deed is in all of your names, as tenants in common? So you want financing on your TIC interest only as collateral? All of you can't refi the whole building together so a conventional commercial lender will finance?
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Account Closed
It still is...
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Jessica Zolotorofe
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
9y
And if that's the case, the next question would be, does that mean there is no actual mortgage lien, just an assignment of TIC interest? or did they actually file mortgages for each tenant in common against the real property somehow?
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Jessica Zolotorofe
There are group loan and individual loan on TIC... ours is individual loans... in theory, I guess, if I default, my lender has limited options on foreclose etc because we all jointly own the whole building ....but I don't really know for sure
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Jessica Zolotorofe default compounding interest is no longer allowed under dodd frank for owner occ loans. and yes its exactly what she has is a TIC very common in SF in the day
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Diane G. OPEN a refi escrow with a local escrow company like First American or Chicago or Fidelity etc.. and then read your Preliminary title report.. that will tell you exactly how this is all set up.
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