Investor · Austin, TX · Member since 2015 · 19 posts · 11 votes
I'm putting together a deal where we will have 75-80% conventional funding and 20-25% private money - so no money down. For context, this deal is in Texas. I have the private money lined up and committed. However, I'm looking for a template for a private money lender agreement. I checked the BP FilePlace, but nothing seemed to fit. Can anyone help point me in the right direction for a template to use for the private money side of this deal? Of course, the conventional lender doesn't know anything about the private money side of this deal. The private money funds are being seasoned in my account. Do I need to file anything with the county or state on this "second" loan? Please let me know if I need to provide any more deal clarification.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Well, congratulations on admitting to mortgage fraud on the internet, Mr. Lange from Austin, Tx. LOL You even went so far as to show the intent to defraud the lender by seasoning the funds in your account!
When you see your attorney, be sure to point this out to them, they will need to know so they can fix what you probably screwed up.
In Texas, the agreement you're asking for is a Note and Deed of Trust.
You probably don't know that loans are reviewed after they are made, there can be several audits. Another deed of trust filed within a time frame of your original loan will be a red flag to investigate the use of funds. You title company probably wasn't much help as they may have seen what you were doing and weren't going to be involved with it, they may not even close that second "private money transaction".
I usually give the benefit of the doubt to new posters, but not in this case since you spelled out your intent to season private money in your account.
Might beat feet to your attorney, another thing you may not be aware of is that lenders, title folks, regulators, law enforcement, HUD types are all on the internet and this is a public forum! Mortgage fraud.....up to $100,000 fine and/or 10 years in a federal prison. Good luck :)
Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
11y
It'll vary some by state, but it is essentially just a note outlining the terms of the loan and a security deed (varies by state) which binds the loan to the house.
I actually do my own, but if you aren't familiar with the process you should have an attorney write that stuff up for you.
Most Hard Money lenders dont want you to have a second, but if you are going conventional they probably dont care.
Ask your title co (or re lawyer, depending who handles closings in your state). They may be able to help facilitate the paperwork for you.
If not, reach out to you local rei group leader and ask them. They probably can help steer you in the right direction.
As a last resort try googling "Texas private money note" or a couple of variations on that search term. You'll likely come up with a downloadable doc that you can have a lawyer or escrow company review.
Investor · Austin, TX · Member since 2015 · 19 posts · 11 votes
11y
Thanks for the feedback. My title company was not helpful at all. Turning to lawyer next, but was hoping to avoid that. I feel like I'm reinventing a wheel that has already been created thousands of times.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Well, congratulations on admitting to mortgage fraud on the internet, Mr. Lange from Austin, Tx. LOL You even went so far as to show the intent to defraud the lender by seasoning the funds in your account!
When you see your attorney, be sure to point this out to them, they will need to know so they can fix what you probably screwed up.
In Texas, the agreement you're asking for is a Note and Deed of Trust.
You probably don't know that loans are reviewed after they are made, there can be several audits. Another deed of trust filed within a time frame of your original loan will be a red flag to investigate the use of funds. You title company probably wasn't much help as they may have seen what you were doing and weren't going to be involved with it, they may not even close that second "private money transaction".
I usually give the benefit of the doubt to new posters, but not in this case since you spelled out your intent to season private money in your account.
Might beat feet to your attorney, another thing you may not be aware of is that lenders, title folks, regulators, law enforcement, HUD types are all on the internet and this is a public forum! Mortgage fraud.....up to $100,000 fine and/or 10 years in a federal prison. Good luck :)
@Bill Gulley was referring to is the notion of a "silent second" - Google search that term ...
Steve, I tried that, got a lot on foreclosure seconds. Add to that; mortgage fraud.
Conventional lending risks are pretty well based on the skin in the game, that being the borrower's skin, not some else's.
This is a big deal, especially in low-moderate income areas, eventually it flows through to foreclosures, degrading neighborhoods and property values dropping. You might say its where the cancer begins, trying to out fox the regulatory requirements that were set there for a reason is not the way to conduct business. :)