Creating a private mortgage without title company

5 Replies

I am in the process of lending a person money for renovating an owner occupied home.   The home was recently bought for $50,000 cash and is free and clear.

I am trying to create a note for $15,000.  I am wondering how hard it would be to create a mortgage for this note which in my opinion would reduce the risk .  Based on the low amount of the loan, the owners equity in the home, and the owner's recent closing I do not have any particular need for getting a lenders policy or going through a title company.  I would simply like to create the note and mortgage and  record the mortgage myself at the court house.  

I appreciate any feedback.

C. Gallegos     

Bad, bad, bad, bad idea.  Would you like to hear some horror stories?  ALWAYS get a lender's policy of insurance.  There are bound to be issues with the property or the seller.

To answer your question, yes, you can create a mortgage on a property without title insurance . . . my question to you is "why would you?"  It would be like getting married without dating first.  You have NO idea what you're getting into!

Contact me through BP if I can be more helpful!

Thanks for the reply.  The more I research this, the more obstacles I see that I am not thoroughly familiar with, for example SAFE and Dodd Frank.  My goals are to invest in small mortgages, not more than a few each year.   If I were to do this through  title company, I believe I have to provide loan closing instructions etc.

Do you know if there are companies that specialize in helping create such mortgages?  

I think you will find that lending money against primary residences is going to be more headache than it is worth.

@Carlos Gallegos

  you have many issues with owner occ  secured loans.

for instance in Oregon under 50k there is a limit to the interest you can charge. check state regs and you need to do the full dodd frank tila and all that to be complaint

Thank you all for your replies.  I agree that this is going to be more headache than it is worth.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.