Wraps and due on sale clause

Attorney · 3409 Executive Center Drive Ste 110 Austin, Texas 78731 · Member since 2020 · 99 posts · 92 votes

I want to start a discussion re the due on sale clause

We are seeing more issues re lenders calling notes due. Some because of mistakes with insurance. But, some due to lenders looking.

One lender/servicer is HomeLoanServ. They actually are looking at prior foreclosures that were reinstated.

What are you folks seeing? Are you taking measures to protect your deals?

Thanks and let us know -- let's get info flowing

Alan

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Jay HinrichsBusiness Member

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

Quote from @T. Alan Ceshker:

Thanks for the question

Yes it does

First - get insurance in place correctly -- use a proven insurance provider -- this is most important

Educate seller to not contact the bank

Use a trust structure to have the conveyance appear to comply with Garn St Germain

Be ready to fix if needed via a deed flip flop or paying off the mortgage

These transactions should only be attempted by experienced and ready investors -- those with the knowledge and ability to fix if needed

Thanks

Alan

OK other than paying off the mortgage everything else you describe is just trying to get away with something that you know gives the lender the option to call the note.. and deed flip flop is going to cause tax implications as someone who was raised i sub to and wrap my dad did them in the 70s and 80s and I have bought about 200 sub 2s but my play was just to fix flip and sell not to own long term this is where the risk comes especially those that wrap these to buyers that may or may not pay.
paying off mortgage is the ONLY sure fire way to make sure these dont end up in a mess.

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Wraps and due on sale clause

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