getting a new loan when I have wrap loans on my balance sheet?

2 Replies

I unloaded a couple of rental properties last year via owner finance.  I originally bought these with 30 year Fannie Mae mortgages, and the loans I extended to my buyers "wrap around" the Fannie Mae mortgages, which I continue to pay. 

I now have the chance to pick up another rental at a pretty good price. I expect that if I tried to get a Fannie Mae mortgage on the new property, the loan officer will notice that--while the old Fannie Mae loans are current--those old properties are no longer titled to me. And the result would be a prompt rejection of my application. So perhaps a local credit union or community bank would be a better shot?

I'd be interested to hear from anyone who has obtained new financing with wrap loans on their balance sheet, or even attempted it.  Was it an obstacle?  If so, how did you get around it?

Mike,

I have a couple ideas, not sure if they will fit your exact situation or end goals with the limited information provided.

First one is, you could sell a partial to pay off underlying note and keep the tail. This would allow you to move forward with your next deal without throwing red flags to the lender.

Second you could sell the entire note and pay off the underlying and take your additional proceeds and roll to your next deal.

Third roll the dice and try to proceed and see what snags you run into with the new financing. 

I'm interested in hearing more answers from others as well.  I have been interested in trying this as an exit in the near future so it will be nice to know more options.

Jeff V

Fourth idea would be sell a partial to pay off underlying first with a split payment where part goes to the partial buyer and remainder goes to you. This way takes care of the underlying first concerns, you shouldn't have to take a major haircut with the partial and you won't have to wait for years to collect your payments on your tail/profit portion.

Jeff V