Suffolk, VA · Member since 2017 · 28 posts · 5 votes
Hello Bp,
Question, are title agents allowed to wrap FHA loans?
I came across a property that is in pre foreclosure status and seller is looking to sell. I want to wholesale it but not sure if a title agent can wrap a FHA loan for term of 5 years.
I really appreciate any feedback!
Thanks
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
Quentin Forbes It never hurts to request to see the mortgage agreement and find if there is a due in sale clause.
You'll learn a lot just by reading it. It's a bit dry but it's worth reading. There may need to be some interpreting and I suggest to ask them here in the lender category for clarification.
Best of luck!
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Not allowed on almost any loan.
Not allowed doesn't mean illegal. Only that if the bank finds out they """"can"""" call the loan due.
Will they? Almost never.
I've done it MANY times when I was starting and couldn't get financing.
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
Hi @Quentin Forbes from your initial post it appears you have contact with the seller?
If that is the case gently brooch the topic of how you may be able to save the seller from losing the house. Carefully spell out exactly what you do as a wholesaler and make clear transparency is key to finding a real estate investor fast(Buyer), therefore, being able to review his mortgage agreement will help you determine if there is a way to save the house from foreclosure.
Simply ask the seller for it. If he states he has no clue where it is then there might be more to his story than what he is telling. It could be a red flag or not. He may honestly not know where it is.
If the Seller is really wanting to save the house he will find the mortgage agreement especially if you already can prove you have a buyer ready to go.
Another strategy is to get written permission/authorization from the Seller to allow you to contact his lender and to allow you full disclosure of any and all documents pertaining to the mortgage. Once you have authorization you can simply call the lender and ask if there is a due on sale clause. You don't need to explain your question but in the event you are challenged simply state I am representing the seller and you are asking on his behalf.
These strategies are more advance and I caution you to build and have a very good rapport with the seller prior to executing these strategies.
The simplest way to find out is to have the Seller pick up the phone and ask the lender.
Suffolk, VA · Member since 2017 · 28 posts · 5 votes
9y
@Scott Matthew thanks for taking the time out to explain. I will definitely try it. It's seems that the seller is very motivated and will cooperate any way necessary
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
@Quentin Forbes another thought is to inquire if you can assume the mortgage. There is a slim chance so don't get your hopes up. But if done tactfully you may be able to negotiate it.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Yes. I've wrapped a commercial loan. Residential loan. A expensive second. An SBA loan.
You name it. I wrote an article about what I learned. Mostly as a way to have all the common questions answered in one spot. I'd direct people to my article when I started talking to them about wraps (as most people knew little)
I've posted links to it here before but it was removed as "advertising" (whatever, I don't come here to sell anything and my link was educational).
Anyway what I wrote was years ago. I'm sure at this point google will give you better info than I could.
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
@Quentin Forbes great question! I'm glad you asked. My approach is much different. I haven't wrapped a FHA mortgage. It's practically hard to do! However, there may be cases that it has been done.
I simply negotiate a deal with the lender prior to them foreclosing.
In other words it's a short sale approach.
A few of my associates in CA have done what you are seeking to do and the consequences could be devastating.
Keep this in mind. Both parties involved literally have no recourse if the loan is called due. The owner will lose the property and the investor will most likely take a financial hit.
However, if the investor is cash rich, he may be able to have the seller give up the deed if the investor pays the mortgage in full.
@Quentin Forbes great question! I'm glad you asked. My approach is much different. I haven't wrapped a FHA mortgage. It's practically hard to do! However, there may be cases that it has been done.
I simply negotiate a deal with the lender prior to them foreclosing.
In other words it's a short sale approach.
A few of my associates in CA have done what you are seeking to do and the consequences could be devastating.
Keep this in mind. Both parties involved literally have no recourse if the loan is called due. The owner will lose the property and the investor will most likely take a financial hit.
However, if the investor is cash rich, he may be able to have the seller give up the deed if the investor pays the mortgage in full.
Best of luck!
In my experience and it's a limited one because my sub2 deals don't get called you can refinance as a last resort. Bank gets there money and seller doesn't get a credit crash. Still that's no way to earn money. Best way is to structure it so it doesn't get called. Thus sub2 is not for the faint of Hart nor the novice.
Yes. I've wrapped a commercial loan. Residential loan. A expensive second. An SBA loan.
You name it. I wrote an article about what I learned. Mostly as a way to have all the common questions answered in one spot. I'd direct people to my article when I started talking to them about wraps (as most people knew little)
I've posted links to it here before but it was removed as "advertising" (wtf ever, I don't come here to sell anything and my link was educational).
Anyway what I wrote was years ago. I'm sure at this point google will give you better info than I could.
Your a braver man than me to wrap a commercial loan. I'm guessing DOS was upwards of 100k.
@Quentin Forbes great question! I'm glad you asked. My approach is much different. I haven't wrapped a FHA mortgage. It's practically hard to do! However, there may be cases that it has been done.
I simply negotiate a deal with the lender prior to them foreclosing.
In other words it's a short sale approach.
A few of my associates in CA have done what you are seeking to do and the consequences could be devastating.
Keep this in mind. Both parties involved literally have no recourse if the loan is called due. The owner will lose the property and the investor will most likely take a financial hit.
However, if the investor is cash rich, he may be able to have the seller give up the deed if the investor pays the mortgage in full.
Best of luck!
In my experience and it's a limited one because my sub2 deals don't get called you can refinance as a last resort. Bank gets there money and seller doesn't get a credit crash. Still that's no way to earn money. Best way is to structure it so it doesn't get called. Thus sub2 is not for the faint of Hart nor the novice.
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
@Quentin Forbes and @Jonathan Damon Hi Jon, yes that is another option. I'm glad to hear you are successful in wraps. I have had plenty of opportunities to wrap but I could never pull the trigger.
My business partner has a saying I have taken as my own. "I must be able to sleep at night and to have a clear conscience"
With wraps, I'm fairly certain I would have trouble sleeping at nights.
@Quentin Forbes and @Jonathan Damon Hi Jon, yes that is another option. I'm glad to hear you are successful in wraps. I have had plenty of opportunities to wrap but I could never pull the trigger.
My business partner has a saying I have taken as my own. "I must be able to sleep at night and to have a clear conscience"
With wraps, I'm fairly certain I would have trouble sleeping at nights.
Best of luck!
My question is why? I'm not looking to hurt anyone with anything I do within any of my business. I like win wins and if a seller is about to lose one of there biggest expenses in there life and I can help I will. Sometimes even if I make nothing on the deal. Honestly though sub2 is complicated and probably 1% of my dealing because I don't like the risk and I don't like being a landlord. I know it's cliche but full disclosure is my bread and butter. When you deal with me I'm going to make sure you understand and feel good about what you're doing.
Jonathan Damon I plan to flip it to another investor through a land contract so subj2 wasn't going to be option.
So basically you are wanting to do a lease option to the investor? Or a lease option with the deed saying in place with the seller? If the latter you would not have to worry about DOS just have to make sure that you have enough meat to make it worth it to you. You can also work it to were you do a lease option with the seller and a note on the investor. Where you have a escrow service hold the deed. Just some things to think about. With that you could stretch it out 5 years and no fear of DOS. Downfall would be you would have to purchase the land at some point