All Forum Posts by: Alan Nelson

To the point, my paid attorney told me something different.  Granted, one thing that came out of the conversation was a more robust affidavit for the homeowner/principal of the borrower to complete.

@Patrick Roberts - thanks for the reply.  Definitely a lot of conflicting information/ambiguous guidance on this issue.

 Patrick - my understanding is that the primary determining factor here would not be primary residence vs. investment property; rather, it would be the purpose of the loan since there is a specific exclusion under DF for business purpose loans. 12 CFR Sec. 1026.3(a).  Or, am I misreading something?

@Glenn N. - Are most of your loans short-term/interest-only, or are they more complex (e.g., longer-term, amortized, require escrow, commonly modified b/c of prepayments, etc.)?  I have found that it is quite simple to self-manage a portfolio of 30-40 short-term/interest-only loans using a combination of QuickBooks and an XL workbook (1 worksheet "tab" for each loan).  My CPA takes care of the 1098s.  

Some DIY lenders use a program called NoteSmith, but IMO, if the loans are too complex to easily manage with simple XL/QuickBooks, I'd be using a 3P servicer.  In the latter case, I would still use QB to enter info provided by the 3P servicer and to maintain my general ledger for the lending business.

 @Tom Gimer - You are correct, and many loan docs provide that an additional encumbrance constitutes an event of default.  However, such a provision doesn't actually prevent that additional/junior lien from attaching to the property, leaving the 1st lien lender stuck with the issues @Chris Seveney mentioned.  The one good thing about such a provision is that it allows the senior lender to start foreclosure (or notice of default/cure period) immediately.      

Agree with @Kerry Noble Jr.  I've been in this situation as well and understand the want to help.  At the end of the day, the purpose/use of the proceeds is for the borrower's personal home (i.e., personal, family, or household purposes), which puts this loan squarely in the consumer loan category.

@Dave Skow and @Caroline Gerardo, why don't HELOC lender like to be in 1st position? (Do they really not get an insured closing with their own lender's title policy?)

Thanks @Doug Smith

@Doug Smith, that is good to know. In terms of underwriting criteria, what kind of cumulative LTV are you seeing for 2nd position?

@Eamon Conheady - was the other lender a company or a private individual?  If a company, it would be great to know of a reputable non-recourse lender.